PRESENTATION

ON FINANCIAL ACCOUTING COST ACCOUNTING AND MANAGEMENT ACCOUTING

SUBMITED TO : PROF. MEERU SEHGAL SUBMITED BY: RAMAN DUTTA ROLL NO 8104 MBE 1 & 2

ACCOUNTING

Meaning :Accounting is the science of recording and classifying business transaction and events, primarily of a financial character, and the art of making significant summaries, analysis and interpretation of those transaction and events and communicating to the persons who must make decisions or from judgements.

Branches of Accounting

FINANCIAL ACCOUNTING

Financial Accounting
Definition:the American institute Certified Public Accountants (AICPA) has defined Financial accounting as the art of recording, classifying and summarising in a significant manner in term of money transaction and events which in part, at least of a financial character and interpreting the result thereof.

PROCESS OF FINANCIAL ACCOUTING

OBJECTIVE
There are two main objective of financial accounting are: 1. Find out profitability of the concern 2. provide information about the financial position of the concern Financial statements are prepared at the end of the financial accounting and are the major source of financial information of an enterprise. The financial statements provides a summary of accounts of a business enterprises the balance sheet reflecting the assets, liabilities and capital on a certain date and the income statement showing the results of operations during a certain periods.

FINANCIAL STATEMENTS
FINANCIAL STATEMENTS

Position statements Or Balance sheet

Statement of Changes in Financial position

Statement of change In Owners Equity

Income and expen Diture statement Or profit and Loss Account

Fund Flow Statement

Cash flow Statement

COST ACCOUNTING

Cost Accounting
Meaning:The institute of cost and works accountants (ICWA) Has defined cost as the amount of expenditure (actual or notional) incurred on or attributable to a given thing. The institute of cost and management accounting London defines cost accounting is the process of accounting from the point of view at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost centre and cost unit. In the widest usage it embraces the preparation of statistical data, application of cost control methods and the ascertainment of profitability of activities carried out or planed.

OBJECTIVES
Determining Selling price

Ascertaining Costing profits

Controlling Cost
Cost accounting

Providing Information For decision making

Preparation of Financial and The other statements

IMPORTANCE
COST ACCOUNTING

Importance to The management

Importance to creditors

Importance to employees

Importance to National economy

Helps in ascertainment Of cost & In cost reduction

Elimination of Wastages

Helps in fixing Selling prices

Help in Inventory control

DISADVANTAGE
COST ACCOUNTING

Cost accounting Is Expensive

Difference in reports Between cost And financial A/C

Cost accounting Is unnecessary

Cost accounting System doesn't Control cost

PROCESS OF COST ACCOUNTING

MANAGEMENT ACCOUTING

DEFINITIONS
According to the The Institute of Chartered Accountants of India such of its techniques and procedure by which accounting mainly seeks to the aid the management collectively have to come known as management accounting According to the American accounting association Management accounting includes the methods and trhe concepts necessary for effective planning, for choosing among alternatives business action and for control through the evaluation and interpretation of performanes.

IMPORTANCE OF MANAGEMENT ACCOUNTING

Management accounting is used for internal decision making, project selection, budgeting, performances evaluation and strategy

OBJECTIVES
Motivating employees

Resource allocation Management accounting

Helpful in Tax administration

Assessing risks

Measuring performance

RELATION
COST ACCOUNTING FINANCIAL ACCOUNTING

MANAGEMENT ACCOUNTIN

DIFFERENCE BETWEEN
FINANCIAL ACCOUNTING, COST ACCOUNTING AND MANAGEMENT ACCOUNTING

BASIS OF DIFFERENCE
1. Objective
Financial accounting provides information about the financial performance and financial position of the business Cost accounting provides information of ascertainment of cost to control cost and for decision making about cost Management accounting provides information to the management for formulating varies polices and plans for effective administration control.

2. NATURE
Financial accounting classifies records, presents and interprets transaction in term of money. Cost accounting classifies, records, presents, interprets in a significant manner the material, labour, and overhead cost Management accounting deals with projection of figure for the future. management accounting usually include a wide variety of non-financial in formation, its often includes the analysis of 1. Employees( number, costs, productively) 2. sales volumes ( Units sold etc.) 3. Customer transaction (no of call received)

3. Recording of data
Financial Accounts records historical data. It records only those transaction which have already taken place. Cost accounting also records and presents the estimated /budgeted data. It makes use of both the historical costs and pre-determined costs. Management accounting deals with the projection of data for the future. It largely focus on analyzing historical performance. However it includes some foreword looking elements like sales budgets. Cash flow forecast

4. USE OF INFORMATION
The user of financial accounting statements are shareholder, creditors, financial analysis and government and its agencies etc. The cost accounting information is used by internal management at different level for effective cost control. Management accounting information is used only bye management for formulating and implementing various plans and policies.

5. ANALYSIS OF COST AND PROFIT

Financial accounting shows the profit or loss of the organisation through the Profit and loss account. Cost accounting provides the details of cost and profit of each product, jobs, process, contracts, etc. Management account does not provides any information about the profitbility of the concern. It formulate various plans for effective cost control & profit maximisation like responsibility accounting, price level accounting etc.

6.TIME PERIODS
Financial accounting statements are prepared for a definite period usually one accounting year. Its profit and loss accounts is generally prepared for one year. And balance sheet is prepared on a particular date. Cost accounting reports and statements are prepared as and when required Management accounting supplies information from to time during the whole year. There are no specific periods for which management accounts are prepared.

7. FORMAT OF ACCOUNTS
The format of published financial accounts are determined by several reguratlery element 1. Company law 2. Accounting standards 3. stock exchanges there this no pre determined format management accounts. They can be as detailed or brief as management wish. Certain principle and procedure are to be followed for recording cost of different products in cost accounting

8. COMPULSION
Companies that are incorporated under companies act 1989 are required by law to prepared and publish financial accounts. The level of the detailed required in these accounts reflects the size of the business There is no legal requirement to prepare managements accounts, although few well run business can survive without them. There also no legal requirement in cost accounting. The objective of it is to record the cost of producing a product or providing a services. And helping management in cost control and determine sales prices

9. PUBLICATION OF ACCOUNTS
Financial accounts like profit and loss A/C and balance sheet published for the benefit of public. Under companies act every company is supposed to supply a copy of P&L A/C and balance sheet to the registrar of companies at the end of the financial year Management statement are prepared for the benefit of the managements in recoding, planning and controlling the activities of a business and assist in the decision making process. So these are not published. Cost accounting reports are also not published. it helps managements in determine cost of a product and formulating policy for cost control

REFERENCE
1. 2. 3. 4. 5. 6. Horngren Sundem Ostratton Hilton Deardon Internet