This document provides an overview of an accounting course for managers. It outlines the course objectives, which include understanding management and cost accounting techniques, performing financial analysis, calculating financial ratios, and preparing statements of cash flows and budgets. It also outlines the evaluation criteria and covers topics like the need for accounting, definitions of accounting, the functions and role of accounting/accountants, and accounting services. The overall purpose is to introduce managers to key accounting concepts and financial reporting.

1. Accounting for ManagersAccounting for Managers
Dr Mohinder SinghDr Mohinder Singh
Department of Accounting and Finance,Department of Accounting and Finance,
School of Business and Management Studies,School of Business and Management Studies,
Central University of Himachal PradeshCentral University of Himachal Pradesh

2. Course ObjectivesCourse Objectives
 Define management accounting and understandDefine management accounting and understand
the techniques used in management accounting.the techniques used in management accounting.
 Apply the tools of financial analysis to performApply the tools of financial analysis to perform
horizontal and vertical analysis.horizontal and vertical analysis.
 Calculate and interpret various financial ratios.Calculate and interpret various financial ratios.
 Demonstrate knowledge of, and ability toDemonstrate knowledge of, and ability to
prepare, a statement of cash flows.prepare, a statement of cash flows.
 Define managerial accounting and understandDefine managerial accounting and understand
the techniques used in cost accounting.the techniques used in cost accounting.
 Compute break-even and cost-revenue analysisCompute break-even and cost-revenue analysis
and understand how to interpret the results.and understand how to interpret the results.
 Prepare various types of budgetsPrepare various types of budgets

3. Evaluation CriteriaEvaluation Criteria
Mid Term Examination: 25%Mid Term Examination: 25%
End Term Examination: 50%End Term Examination: 50%
Continuous Internal Assessment: 25%Continuous Internal Assessment: 25%
Attendance 5%Attendance 5%
Quiz 5%Quiz 5%
Case study 5%Case study 5%
Presentation 10%Presentation 10%
Written tests 5%Written tests 5%

4. Need for AccountingNeed for Accounting
 Records and communicates the financialRecords and communicates the financial
result of operations of an organization toresult of operations of an organization to
various concerned parties such asvarious concerned parties such as
stakeholders, government agencies etc.stakeholders, government agencies etc.
 Provides information that helps theProvides information that helps the
management of the organization to planmanagement of the organization to plan
the future course of action and other fundsthe future course of action and other funds
related issues.related issues.
44

5. 55
Need for Accounting……….Need for Accounting……….
 Remembering business TransactionsRemembering business Transactions
 Statuary RequirementsStatuary Requirements
 Knowledge of Debtors and creditorsKnowledge of Debtors and creditors
 Assessment of Tax LiabilityAssessment of Tax Liability
 Fixation of PriceFixation of Price
 Evidence in Court of LawEvidence in Court of Law
 Enable Comparative studyEnable Comparative study
 Language of businessLanguage of business

6. 66
Definition of AccountingDefinition of Accounting
 Definition of accounting by AmericanDefinition of accounting by American
Accounting Association (AAA):Accounting Association (AAA):
““Accounting is the process of identifying,Accounting is the process of identifying,
measuring and communicating economicmeasuring and communicating economic
information to permit informed judgmentsinformation to permit informed judgments
and decisions by users of the information”and decisions by users of the information”

7. Definition of AccountingDefinition of Accounting
 Accounting is a standardised system ofAccounting is a standardised system of
recording , verifying and reporting therecording , verifying and reporting the
transactions of the company in the bookstransactions of the company in the books
of accounts which helps the lenders,of accounts which helps the lenders,
managers, tax authorities, investors andmanagers, tax authorities, investors and
market regulators to make decisions.market regulators to make decisions.
 AICPA, “ Accounting is to provideAICPA, “ Accounting is to provide
quantitative information of financial naturequantitative information of financial nature
about eco. Entities that is useful in makingabout eco. Entities that is useful in making
eco. Decisions.eco. Decisions.
77

8. 88
Functions of AccountingFunctions of Accounting
 RecordingRecording: Accounting helps record all the: Accounting helps record all the
business transactions of financial character in anbusiness transactions of financial character in an
orderly manner. Recording is done on variousorderly manner. Recording is done on various
Journals.Journals.
 ClassifyingClassifying: After the systematic analysis of the: After the systematic analysis of the
recorded data, the entries of similar nature arerecorded data, the entries of similar nature are
grouped at one place. Transactions are classified ongrouped at one place. Transactions are classified on
Journals.Journals.
 SummarizingSummarizing: The classified data is displayed in: The classified data is displayed in
understandable and easy to use statements such asunderstandable and easy to use statements such as
balance sheet, trial balance etc.balance sheet, trial balance etc.

9. 99
Functions of Accounting (Cont..)Functions of Accounting (Cont..)
 Financial DealingFinancial Dealing: Accounting records only: Accounting records only
monetary transactions that are of financial nature.monetary transactions that are of financial nature.
 AnalyzingAnalyzing: A methodical classification of recorded: A methodical classification of recorded
data and presenting in financial statements such asdata and presenting in financial statements such as
current liabilities etc.current liabilities etc.
 InterpretingInterpreting: Accounting helps in explaining the: Accounting helps in explaining the
meaning and significance of the data in simplifiedmeaning and significance of the data in simplified
form.form.
 CommunicatingCommunicating: Accounting helps in: Accounting helps in
communicating the analyzed and interpretedcommunicating the analyzed and interpreted
information in the form of graphs, ratios etc.information in the form of graphs, ratios etc.

10. 1010
Book Keeping and AccountingBook Keeping and Accounting
 Accounting refers to designing the system forAccounting refers to designing the system for
recording the financial data and thenrecording the financial data and then
presenting it in logical manner to the endpresenting it in logical manner to the end
users.users.
 Book-keeping is concerned with recordingBook-keeping is concerned with recording
financial data in an orderly manner.financial data in an orderly manner.

11. 1111
End Users of AccountingEnd Users of Accounting
InformationInformation
 ProprietorsProprietors: Profitability and financial: Profitability and financial
health of an enterprise needs to behealth of an enterprise needs to be
communicated to the proprietors.communicated to the proprietors.
 ManagersManagers: Financial disclosures: Financial disclosures
communicate the financial health and helpcommunicate the financial health and help
the managers to plan and manage thethe managers to plan and manage the
enterprise better.enterprise better.
 CreditorsCreditors: Entities that have extended credit: Entities that have extended credit
look into financial statements to ascertainlook into financial statements to ascertain
security of their credit.security of their credit.

12. 1212
End Users of AccountingEnd Users of Accounting
Information (Cont..)Information (Cont..)
 Prospective InvestorsProspective Investors: Financial statements: Financial statements
communicate profitability and financialcommunicate profitability and financial
health to attract investment into an enterprise.health to attract investment into an enterprise.
 GovernmentGovernment: Financial statements serve as: Financial statements serve as
the basis of meeting government liabilitiesthe basis of meeting government liabilities
pertaining to taxation, labour and corporatepertaining to taxation, labour and corporate
laws.laws.
 EmployeesEmployees: Bonus or profit sharing or: Bonus or profit sharing or
Employees Stock Options Plan is preparedEmployees Stock Options Plan is prepared
using financial statements.using financial statements.

13. 1313
Role of an AccountantRole of an Accountant
 Role of the accountant in public service:Role of the accountant in public service:
 Provides services such as financial audit, costProvides services such as financial audit, cost
audit etc.audit etc.
 Is the member of professional bodies, Institute ofIs the member of professional bodies, Institute of
Chartered Accountants of India and Institute ofChartered Accountants of India and Institute of
Cost and Work Accountants of India.Cost and Work Accountants of India.
 Trained in a prescribed manner and observeTrained in a prescribed manner and observe
accounting principles enunciated by theaccounting principles enunciated by the
professional body.professional body.
 Observe the code of ethics laid down by theObserve the code of ethics laid down by the
professional body.professional body.

14. 1414
Role of an Accountant (Cont..)Role of an Accountant (Cont..)
 Role of the accountant in employment:Role of the accountant in employment:
 Is employed in business or non businessIs employed in business or non business
entities.entities.
 Maintains accounting records for the entityMaintains accounting records for the entity
 Provides information for tax returns,Provides information for tax returns,
financial performance etc.financial performance etc.

15. 1515
Accounts ServicesAccounts Services
 Maintenance of the books of accounts:Maintenance of the books of accounts:
 Keeps a systematic record of businessKeeps a systematic record of business
transactionstransactions
 Provides information on financial performance ofProvides information on financial performance of
the entitythe entity
 Helps the management of an organization inHelps the management of an organization in
taking important decisions on the basis of vitaltaking important decisions on the basis of vital
accounts informationaccounts information
 Reduces the risk of losing information due to lossReduces the risk of losing information due to loss
of memory because the information is recordedof memory because the information is recorded

16. 1616
Accounts Services (Cont..)Accounts Services (Cont..)
 Helps perform the comparative study onHelps perform the comparative study on
performance after fixed interval of timeperformance after fixed interval of time
 Maintains the accounting records systematicallyMaintains the accounting records systematically
that are acceptable to tax authorities and can bethat are acceptable to tax authorities and can be
taken as evidence in court of lawtaken as evidence in court of law
 Serves as the basis for proper evaluation ofServes as the basis for proper evaluation of
business entitybusiness entity

17. 1717
SummarySummary
 In this unit, you have:In this unit, you have:
 Described the need for accountingDescribed the need for accounting
 Perceived the development of accountingPerceived the development of accounting
 Explained the meaning of accountingExplained the meaning of accounting
 Named the persons interested in accountingNamed the persons interested in accounting
disclosuresdisclosures
 Identified the objectives of accountingIdentified the objectives of accounting
 Described the role of accountant in the societyDescribed the role of accountant in the society