Hey hy, I'm B.LALITHA SUBHANAM from EMG Yadava Womens College. Here is a slide regarding Management accounting in my view. THANK YOU!!!

1. A S S S T . P R O F E S S O R . ,
L A L I T H A S U B R A M . ,
D E P A R T M E N T O F C O M M E R C E
E . M . G Y A D A V A W O M E N ’ S
C O L L E G E ,
M A D U R A I - 1 4 .
Management accounting

2. MANAGEMENT ACCOUNTING
Define management
“Management accounting is concerned with
accounting information that is useful to management “-
R.N.Anthony.
Objectives of Management Accounting:
The objective of management accounting are:
 to assist the in promoting efficiency .Efficiency includes
best possible services to the customers ,investors and
employers.
 To prepare ,budgets covering all functions of a
business
(i.e., production ,sales, research and finance).

3.  To analyse monetary and non –monetary
transactions.
 To compare the actual performance with plan
for identifying deviation and their cause.
 To interpret financial statement to enable the
management to formulate future policies
 To submit to the management at frequent
intervals operating statement and short –term
financial statement

4. FINANCIALACCOUNTING
MANAGEMENT
ACCOUNTING
OBJECTIVES: The
main objectives of
financial accounting
is to supply
information in the
form of p&l account
and balance sheet
The objective of
management is
to provide
information for
the internal use
of management
DIFFERENCE BETWEEN THE MANAGEMENT ACCOUNTING AND
FINANCIAL ACCOUNTING
FINANCIAL

5. PERFORMANCE
ANALYSIS : Financial
accounting is concerned
with the overall
performance of the
business .
NATURE: Financial
accounting is based on
measurement while
management accounting
is based on judgement.
LEGAL: Financial
accounting is complusory
for all joint stock
companies
The Management
accounting is concerned
with the departments or
divisions .its reports about
the performance and
profitability of each of
them.
Financial accounting is
more objectives and
management accounting
is more subjective.
Management accounting is
only optional

6. Cost accounting Management accounting
 OBJECTIVES :
THE
OBJECTIVES OF
COST COST
ACCOUNTING IS TO
ASCERTIAN AND
CONTROL OF COSTS
OF PRODUCT ON
SERVICE.
THE OBJECTIVES OF
MANAGEMENT
ACCOUNTING IS TO
HELP THE
MANAGEMENT IN
DECISION MAKING
,PLANING ,CONTROL
ETC.,
.
Difference between cost accounting and management
accounting

7.  NATURE :
COST ACCOUNTING
USES BOTH PAST AND
PRESENT FIGURES .
 DATA :
IN COST
ACCOUNTING ONLY
THOSE TRANSACTIONS
WHICH CAN EXPRESSED
IN FIGURES ARE TAKEN.
 SCOPE:
COST ACCOUNTING
DEALS PRIMARILY WITH
COST DATA
THE MANAGEMENT
ACCOUNTING IS
CONCERNED WITH
THE PROJECTION OF
FIGURE FOR FUTURE.
MANAGEMENT
ACCOUNTING USES
BOTH QUANTITIIES
AND QUALITATIVES
INFORMATION.
MANAGEMENT
ACCOUNTING DEALS
WITH BOTH COST AND
REVENUS.

8. RATIO ANALYSIS
MEANING :
Ratio analysis is the process of determining and
interpreting numerical relationship based on
financial statement. A ratio is a statistical
yardstick that provides a measure of the
relationship between two variables pr figures.
The limitation of the ratio analysis:
Limitation of ratio analysis :
Ratio analysis suffers from certain
limitations. They are discussed below.

9. Limitation of financial standard:
Ratio are based only on the information
recorder in the financial statement .financial
statement suffer from a number of limitation .
Ratio alone are not adequate:
Ratio are only indicators. They cannot be
taken as final regarding good or bad financial
position of the firm .other things have also to be
seen.

10. Ratio analysis formulas
Liquidity (short term solvency)ratios
 current ratio :
current assets
current ratio =
current liabilities
 Liquid or quick ratio :
quick assets
Quick ratio=
quick liabilities
Q . A =current assets-(stock +prepaid expenses)
Q . L =current liabilities –bank overdraft

11. Solvency ratio(long term )
debt equity ratio:
long term debt
Debt equity ratio=
shareholders‘ funds
Proprietory ratio:
shareholders’ funds
proprietory ratio =
total tangible assets

12. profitability ratio:
Gross profit ratio :
gross profit
G .p ratio= *100
sales
Net profit ratio:
net profit
N . p ratio= *100
sales
Operation ratio:
costs of goods sold + operating expenses
O .P = *100
sales

13. Return on capital employed:
net profit + interest + taxes
R.C. E = *100
average capital employed
Activity or turnover ratio:
cost of good sold
Stock turnover =
average stock
credit sale
Debtors turnover ratio=
debtors

14. Average collection period
debtors + bills receivable
= * no . of .working days in a
year
credit sales
Creditors turnover ratio
credit purchase
=
creditors
Average payment periods
creditors +bills payable
=
credit purchase

15. fixed assets turnover ratio
sales
=
net fixed assets
Capital structure ratio
preference hare capital +fixed
interest
secutitie
= equity shareholders’ funds

16. FUNDS FLOW STATEMENT
MEANING :
The funds flow statement is a report on the movement of fund
or working capital . It explain how working capital I raised and used
during an accounting period.
DEFINITION :
A statement of source and application of funds is a technical
device designed to analysis the change in the financial condition of a
business enterprise between two dates.
objectives:
The main objectives of funds flow statements are:
1. To show how the resources have been obtained and used.
2. To indicate the result of current financial management .
3. To throw light upon the most important changes that have
taken place during .
4. To show have the general expansion of the business has been
financed.
5.To have an assessement of the working capital position of the
concern.

17. Sources of funds Use of application of funds
 Issue of shares and
debentures
 Raising of long term
loans
 income from
investments
 Sales of fixed assets
and long term
investment
 Funds from operations
 Redemption of preference
hares and debentures
 Repayments of loans
 Purchase of long term
investment
 Purchase of fixed assets
 Payment of taxes and
dividends
 Drawings (in case of
proprietory or partnership
business)
 Loss of cash by embezzlement
 Funds lot in operations.
The items of sources and application of funds

18. Calculation of funds from operation:
Net profit earned during the year
+ Non-fund and non-operation items
which are already debited to p & la/c:
Depreciation on fixed assets
Goodwill of shares written off
Discount on issue of shares, written off
Preliminary expenses written off
Patents written off
transfer to reserves
loss on sales of fixed assets

19. -
Non –funds or Non –operation items
Which are already credited to p & l a/c:
profit on sale of fixed assets
profit on revaluation of assets
Rent received
Dividend received
Refund of income tax
Funds from operations

20. Cash flow statement
Meaning :
A statement pals the inflow and prepared
from the historical data(i.e. income statement and
balance sheet)showing source and uses of cash is
called cash flow statement .it reveals the inflow and
outflow of cash during the particular period. Cash
flow statement can be prepared for a year ,half year
, quarter or for any other duration . The term cash
is used to refer bank balance also:

21. Objectives:
1. To show the causes of changes in cash balance
between two balance sheet dates
2. To indicates the factors contributing to the reduction of
cash balance inspite of increase in profits and vice
versa.

22. THANK YOU