1. Management Accounting

2. The Functions of Management Planning Acting Controlling Feedback

3. Management Accounting A process of: -Identification -Measurement -Accumulation -Analysis -Preparation and Interpretation -Communication

4. Nature Various system of Management Accounting Concerned with collection, analysis and communication of accounting information A science – objectification & quantification An art – involves subjective judgment

5. Nature (contd.) Futuristic Concerned with the problem of choice Recognition of the nature of the various elements of costs Causative relationship of various variables

6. Scope Financial Accounting Cost Accounting Revaluation Accounting Budgetary Control Inventory Control Statistical Methods Interim Reporting Taxation Office services Internal Audit

7. Phases of decision making Ph 1. Recognizing and defining problem Ph 2. Searching for alternatives Ph 3. Evaluating alternatives Ph 4. Selecting the best alternative Ph 5. Reporting

8. Functions of Management Accounting Two types: 1. Operating functions 2. Theoretical functions

9. Operating functions Recording of data Validating the data Interpretation of data Communicating the data

10. Theoretical functions Helps in planning Helps in organizing Helps in controlling Helps in coordinating Helps in decision making

11. Advantages Systematic regularity Maximum return Better and improved services Better industrial relations Control wastages Economic advantages

12. Limitations Dependency on accuracy of records Need for continuous coordinated efforts Mere tool of management Subjective judgement involved Installation a costly affair

13. Distinction between Financial Accounting and Management Accounting

14. Primary Users Financial Investors Creditors Government authorities Management Internal managers of the business

15. Purpose of Information Financial Help investors, creditors, and others make investment, credit, and other decisions Management Help managers plan and control business operations

16. Focus and Time Dimension Financial Reliability, objectivity, and focus on the past Management Relevance Futuristic

17. Type of Report Financial Financial statements restricted by GAAP, Accounting Standards Management Internal reports not restricted by GAAP; determined by cost- benefit analysis

18. Verification Financial Annual independent audit by CAs Management No independent audit

19. Scope of Information Financial Summary reports primarily on the company as a whole Management Detailed reports on parts of the company

20. Behavioral Implications Financial Concern about adequacy of disclosure Management Concern about how reports will affect employees behavior