1. Management Accounting- Nature And Scope

2. Financial Accounting – Fin
Financial Accounting – Fin. Acc is concerned with recording, classifying and summarising the business transaction so that at the end of the year profit or loss can be calculated and its effect on owned capital, assets and liabilities can be ascertained.
Principles of Financial Accounting –
A. Accounting Concepts
Business Entity Concept
Going Concern Concept
Money Measurement Concept
Cost Concept
Dual Aspect Concept
Realisation Concept
Accounting Period Concept
Matching Concept

3. B. Accounting Conventions :-
Convention of Consistency
Convention of Materiality and Disclosure
Convention of Conservatism
Limitations of Financial Accounting
Change in Nature of Business
Shift in Emphasis
Provision of Historical Information
Fails to meet the information needs of Different levels of Management
Consideration of only Monetary information
Less Importance of Budgeting and Planning

4. Cost Accounting
Cost Accounting is the next stage in the development of
accounting. Under cost accounting total cost of goods and
the elements of total cost are studied.
Definition :-
ICWA London :- “Cost Accounting is the technique and process of ascertainment of costs.”
Objectives of Cost Accounting
Cost Determination
To help Management in Cost Control
To determine Selling Price
To facilitate Management Decision Making

5. Management Accounting
Management needs detailed information on different aspects to arrive at meaningful decisions. Financial accounting provides some informations but these are not adequate. Management accounting removes these limitations of financial accounting. Thus, management accounting means- “Accounting for Management to discharge its functions including organising, planning, directing and controlling.
Definition :- According to American Accountng Association, “Management accounting includes the methods and concepts necessary for effective planning, for choosing among alternative business actions and for control through the evaluation and interpretation of performance.”
R.N. Anthony :- “Management accounting is concerned with accounting information that is useful to management

6. Functions of Management Accounting
Provides data
Modifies Data
Analysis and interpretation of data
Use of Qualitative Information also
To help in Planning
To help in Organising
To help in Motivation
To help in Co-ordination
Communication
To help in Control
To help in Decision Making

7. Scope of Management Accounting

8. Distinction Between Management Accounting and Financial Accounting
Mgt Accounting
Objectives :- To help mgt in planning & decision-making. It is an Internal reporting system.
Subject Matter :- It reveals the profitability or performance or different departments products etc in detail.
3. Nature of Data used :- Mgt Acc uses detailed, statistical, relative, past and future data and information.
Periodicity :- Small intervals and quick information.
Accuracy :- Need not to be completely accurate.
Fin. Accounting
Provides information to creditors, shareholders, banks, investors, govt. It is an external reporting system.
Fin acc deals with the overall position of business because fin. Statements explain the position the position of business in totality.
Fin acc presents monetary information of historic events and transactions.
Long time period.
Completely accurate.

9. Fin. Accounting
6. Fin. Acc is necessary for every business due to legal provisions.
7. Fin. Accounts are prepared under the provisions of Company act, 1956.
8. Fin. Acc records only those transactions which can e expressed in money form
Mgt. Accounting
6. Compulsion : Mgt Accounting is voluntary and has no legal compulsion.
7. Legal Formalities :- There is no legal form or rules for the statements or reports under mgt accounting.
8. Monetary Transactions :- Mgt acc. Records financial and non-financial information.

10. Distinction between Cost Accounting and Management Accounting
Objective : to determine the cost and control it.
2. Subject Matter :- Cost accounting deals mainly with cost data
3. Scope :- Cost accounting provides information relating to cost of products only , so its scope is narrow.
Mgt Accounting
Mgt Acc helps the management in decision making through cost and financial information.
Mgt acc considers both cost and income aspects.
3. Mgt acc has a wide scope as it collects information from fin. Acc, cost acc and busine4ss finance.

11. Utility of Management Accounting
It helps the mgt in effective planning and decision-making.
Mgt accounting helps the mgt in control through budgetary control, standard costing, marginal costing.
Reporting system of management accounting helps in establishing co-ordination.
Management accounting helps in creating cost centre and profit centres and establishing internal audit and internal control systems for these centres.
Communication plays most important role in decision making and management accounting helps in this regard through its reporting system.

12. Limitations of Management Accounting
Limitations of Cost and Financial Accounting System
Persistence of Intuitive Decision
Wider Scope
Costly System
Psychological Resistance
Evolutionary
It is not Alternative to Management

13. Techniques of Management Accounting
Analysis of Financial Statements
Ratio Analysis
Fund Flow Statement
Cash Flow Statement
Marginal Costing and Cost-volume Profit Analysis
Budgetary Control and standard costing
Management Reporting
Statistical Techniques
Value Added Statement
Accounting Price Level Changes
Human Resource Accounting