PRESENTATION ON CONCEPTS OF MANAGEMENT ACCOUNTING

Presented By:-Shikha Kaushik(144)Monika Chhillar(180)

Presented To:-DR. ANAND SHARMA

MANAGEMENT ACCOUNTING

The Institute of Cost and Works Accountants of India(ICWAI) has defined management accounting as a system of collection and presentation of relevant economic information relating to an enterprise for planning, controlling and decision making.

CHARACTERISTICS OF MANAGEMENT ACCOUNTING

• Useful of decision making• Financial and cost accounting information• Internal use• Purely optional• Concerned with future• Flexibility in presentation of information

SCOPE OF MANAGEMENT ACCOUNTIING

• Financial accounting• Cost accounting• Budgeting and forecasting• Tax planning• Reporting to management• Cost control procedures• Statistical tools• Internal control and internal audit• Financial analysis and interpretation

FUNCTIONS OF MANAGEMENT ACCOUNTING

• Planning• Coordinating• Controlling• Communication• Financial analysis and interpretation• Qualitative information• Tax policies• Decision making

LIMITATIONS OF MANAGEMENT ACCOUNTING

• Based on historical data• Lack of wide knowledge• Complicated approach• Costly system• Developing stage• Lack of objectivity

DIFFERENCE BETWEEN FINANCIAL ACCOUNTING

AND MANAGEMENT ACCOUNTING

BASIS FINANCIAL ACCOUNTING

MANAGEMENT ACCOUNTING

External and internal users

Information is for external users like investors,creditors,govt.etc.

Information is mainly for internal users i.e. management.

Accounting Method Based on Double entry system

Not based on Double entry system

Statutory requirements Obligatory to satisfy various statutory provisions

Optional

Analysis of cost and profit Shows profit & loss of the business as a whole.

Provide information about individual products, plants etc.

Past and future data Represents past and historical trends

Future oriented may use past data for future projections

Periodic and continuous reporting

Financial reports are prepared every year

Reports are prepared frequently

BASIS FINANCIAL ACCOUNTING

MANAGEMENT ACCOUNTING

Accounting Standards Follows accounting standards

Management accounting is not bound by accounting standards

Types of statements prepared

General purpose statements are prepared

Special purpose reports are prepared

Publication and audit Published for general public and audited by chartered accountants

Neither published for general public nor audited by chartered accountants

Monetary and non-monetary measurements

Provides information in terms of money only

May apply monetary or non monetary units of measurement