Responsibility accouting
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Responsibility accounting is a management system that aims to develop performance measures to evaluate segment managers. It provides the right information to managers at the right time. Responsibility accounting categorizes segments as cost centers, revenue centers, profit centers, or investment centers depending on whether managers are responsible for costs, revenues, profits, or capital invested. Evaluation tools may include cost standards, contribution income statements, or rates of return on invested funds depending on the type of responsibility center.
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Responsibility Accounting
Responsibility accounting is a management accounting method where managers are given decision-making authority over a specific department or division and are held responsible for the activities and results within that area. It requires a clearly defined organizational structure divided into responsibility centers such as cost centers (where managers are responsible for incurred costs), revenue centers (responsible for generating revenue), profit centers (responsible for both costs and revenues), and investment centers (responsible for costs, revenues, and return on capital employed). The goals of responsibility accounting are to improve clarity of goals, assist with planning and budgeting, improve quality and cost control, allow for objective evaluation of managers, and decentralize decision-making.
TYPES OF LEVERAGE - FINANCIAL MANAGEMENT
Leverage refers to the use of borrowed funds to acquire assets in the hope that the returns will exceed the cost of borrowing. There are three main types of leverage: operating leverage measures the relationship between sales and operating income; financial leverage measures the relationship between operating income and earnings per share; and combined leverage measures the relationship between sales and earnings per share to indicate total risk. Operating leverage depends on fixed operating costs and how they impact profits with changes in revenue. Financial leverage focuses on how fixed financing costs, like debt, impact returns. Combined leverage assesses a company's overall risk from fixed costs.
Chapter 5 profit center
This document discusses profit centers and how to measure their profitability. It begins by outlining the objectives of discussing considerations for establishing profit centers, whether all business units are profit centers, and how production and marketing can be profit centers. It then provides details on defining profit centers based on measuring financial performance in terms of profit, advantages and difficulties of profit centers, constraints on business unit authority, and alternative ways to measure profit center profitability including contribution margin, direct profit, controllable profit, income before taxes, and net income.
Responsibility Accounting
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
Contract costing
This document discusses key concepts in contract costing such as:
1. A contract is an agreement between a contractor and contractee for construction work at an agreed price.
2. Contract costing tracks costs on each contract to determine profit or loss at completion. It uses a contract account for each job.
3. Incomplete contracts require estimating remaining costs to calculate interim profit using formulas based on work certified and cash received.
Profit centre
This document discusses profit centers and transfer pricing. It defines a profit center as a division of an organization where financial performance is measured based on revenues and costs. Transfer price refers to the price used for goods and services transferred between divisions, and there are several methods for determining transfer price, including cost-based, market-based, and negotiated prices. The document also outlines criteria for evaluating profit center performance and categories of costs and revenues considered.
Responsiblity accounting CMA. Vinato Awomi
Responsibility accounting involves accumulating and reporting costs based on individual managers who control decision making. It traces costs to managers responsible for incurring those costs. Responsibility accounting establishes control through decentralized decision making while retaining overall control. It encourages budgeting and comparison to actual results. Managers are accountable to explain variances from budgets. Responsibility centers include cost centers, profit centers, revenue centers, contribution centers, and investment centers. Principles of responsibility accounting include determining responsibility centers, setting targets, comparing actuals to targets, analyzing variances, taking corrective action, offering incentives, excluding uncontrollable costs, and generating responsibility reports. Difficulties can arise from unclear organization structures and responsibilities as well as distinguishing controllable and uncont
Responsibility accounting
This document discusses responsibility accounting. It defines responsibility accounting as a system that collects planned and actual accounting information for responsibility centers. Responsibility centers are organizational units for which a manager is responsible for costs, revenues, or investment funds. There are four main types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Responsibility accounting improves decision making, speed, and motivation by assigning accountability to managers of responsibility centers.
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Responsibility Accounting
Responsibility accounting is a management accounting method where managers are given decision-making authority over a specific department or division and are held responsible for the activities and results within that area. It requires a clearly defined organizational structure divided into responsibility centers such as cost centers (where managers are responsible for incurred costs), revenue centers (responsible for generating revenue), profit centers (responsible for both costs and revenues), and investment centers (responsible for costs, revenues, and return on capital employed). The goals of responsibility accounting are to improve clarity of goals, assist with planning and budgeting, improve quality and cost control, allow for objective evaluation of managers, and decentralize decision-making.
TYPES OF LEVERAGE - FINANCIAL MANAGEMENT
Leverage refers to the use of borrowed funds to acquire assets in the hope that the returns will exceed the cost of borrowing. There are three main types of leverage: operating leverage measures the relationship between sales and operating income; financial leverage measures the relationship between operating income and earnings per share; and combined leverage measures the relationship between sales and earnings per share to indicate total risk. Operating leverage depends on fixed operating costs and how they impact profits with changes in revenue. Financial leverage focuses on how fixed financing costs, like debt, impact returns. Combined leverage assesses a company's overall risk from fixed costs.
Chapter 5 profit center
This document discusses profit centers and how to measure their profitability. It begins by outlining the objectives of discussing considerations for establishing profit centers, whether all business units are profit centers, and how production and marketing can be profit centers. It then provides details on defining profit centers based on measuring financial performance in terms of profit, advantages and difficulties of profit centers, constraints on business unit authority, and alternative ways to measure profit center profitability including contribution margin, direct profit, controllable profit, income before taxes, and net income.
Responsibility Accounting
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
Contract costing
This document discusses key concepts in contract costing such as:
1. A contract is an agreement between a contractor and contractee for construction work at an agreed price.
2. Contract costing tracks costs on each contract to determine profit or loss at completion. It uses a contract account for each job.
3. Incomplete contracts require estimating remaining costs to calculate interim profit using formulas based on work certified and cash received.
Profit centre
This document discusses profit centers and transfer pricing. It defines a profit center as a division of an organization where financial performance is measured based on revenues and costs. Transfer price refers to the price used for goods and services transferred between divisions, and there are several methods for determining transfer price, including cost-based, market-based, and negotiated prices. The document also outlines criteria for evaluating profit center performance and categories of costs and revenues considered.
Responsiblity accounting CMA. Vinato Awomi
Responsibility accounting involves accumulating and reporting costs based on individual managers who control decision making. It traces costs to managers responsible for incurring those costs. Responsibility accounting establishes control through decentralized decision making while retaining overall control. It encourages budgeting and comparison to actual results. Managers are accountable to explain variances from budgets. Responsibility centers include cost centers, profit centers, revenue centers, contribution centers, and investment centers. Principles of responsibility accounting include determining responsibility centers, setting targets, comparing actuals to targets, analyzing variances, taking corrective action, offering incentives, excluding uncontrollable costs, and generating responsibility reports. Difficulties can arise from unclear organization structures and responsibilities as well as distinguishing controllable and uncont
Responsibility accounting
This document discusses responsibility accounting. It defines responsibility accounting as a system that collects planned and actual accounting information for responsibility centers. Responsibility centers are organizational units for which a manager is responsible for costs, revenues, or investment funds. There are four main types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Responsibility accounting improves decision making, speed, and motivation by assigning accountability to managers of responsibility centers.
Responsibility centers
There are 3 types of responsibility centers - cost centers, profit centers, and investment centers. A cost center manager is responsible only for costs, a profit center manager is responsible for both revenues and costs, and an investment center manager is responsible for revenues, costs, and investments. Responsibility accounting provides managers with budget and actual cost comparisons to evaluate performance. Return on investment is considered the best performance measure as it shows how effectively a manager uses available assets.
Marginal and absorption costing
Marginal costing is an alternative to absorption costing. Under marginal costing, only variable costs are charged as cost of sales and contribution is calculated. Fixed costs are treated as period costs. Contribution is the difference between sales revenue and variable costs, and it goes towards recovering fixed costs and generating profit. The key principles of marginal costing are that fixed costs do not change with volume, so increasing or decreasing sales only impacts profits by the amount of the variable cost per unit. Inventory is valued at marginal/variable cost under marginal costing.
labour cost control
This document discusses labour cost control and labour cost management. It defines direct and indirect labour and explains different types of wages payment systems like time wage, piece wage and incentive wage systems. It also discusses factors for labour cost control like labour records, control of production methods and labour cost analysis. Methods to measure and control labour turnover are provided. The roles of different departments in labour cost management are outlined.
Cost volume-profit analysis
Cost-volume-profit (CVP) analysis is a technique used to analyze the relationship between costs, volume, and profits. It uses linear equations to model how total costs and revenues change with production volume. CVP breaks down costs into fixed and variable components and calculates the break-even point, where total revenues equal total costs. It also determines the contribution margin of each unit and how many units must be sold to cover fixed costs. CVP analysis is useful for short-term decision making but assumes costs and prices remain constant, which limits its effectiveness for long-term planning.
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TRADITIONAL/MANUAL SYSTEM OF ACCOUNTING
PROCESS OF COMPUTERISED ACCOUNTING
FEATUERES OF COMPUTERISED ACCOUNTING
ADVANTAGES AND DISADVANTAGES OF COMPUTERISED ACCOUNTING
PROCESS/STEPS IN COMPUTERISED FINANCIAL ACCOUNTING
ADVANTAGES OF THE COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
VARIOUS COMPONENTS OF A COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM AND COMPUTERISED ACCOUNTING
Time Value of Money (Financial Management)
The document discusses different types of interest rates and annuities. It defines simple interest as interest paid only on the principal amount, while compound interest is interest paid on both previous interest and principal. An annuity is a series of equal payments over a period of time, with ordinary annuities having payments at the end of periods and annuity dues having payments at the beginning. The document also discusses calculating future and present values of these different financial instruments using standard formulas.
Financial Management Slides Ch 20
This document discusses various types of long-term debt instruments, preferred stock, and common stock. It defines key terms related to bonds such as par value, coupon rate, maturity, and bond ratings. It describes different types of bonds including debentures, subordinated debentures, income bonds, junk bonds, mortgage bonds, and equipment trust certificates. The document also discusses preferred stock features like cumulative and participating dividends. Finally, it covers common stock terms like authorized shares, issued shares, outstanding shares, book value, and liquidating value.
MASTER BUDGET
The document provides information about a master budget, including:
- A master budget aggregates all lower-level budgets from a company's functional areas and includes budgeted financial statements, cash forecasts, and financing plans. It typically covers an entire fiscal year.
- Key components of a master budget include sales budgets, production budgets, expense budgets, overhead and production cost budgets, and budgeted financial statements.
- Management uses the master budget to plan and direct all aspects of a company's future operations, including sales, production, expenses, investments, and financing. It is the central planning tool that guides a company's strategic goals and resource allocation.
Creditors and accounts payable
A creditor is a party that is owed money or services by another party called a debtor. Accounts payable refers to money a business owes its suppliers. There are internal controls in place for accounts payable like segregation of duties to prevent fraud. Auditors examine documentation supporting payments made to verify expenses.
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This document discusses performance management. It begins by defining performance measurement and management. It then discusses limitations of traditional performance measurement systems and introduces the Balanced Scorecard as an alternative framework. The Balanced Scorecard uses financial and non-financial metrics across four perspectives: financial, customer, internal processes, and learning and growth. It links objectives and measures across these perspectives to translate strategy into action. The document also discusses measuring performance for service organizations and non-profits using frameworks like the Results and Determinants model and Balanced Scorecard. It concludes by covering reward systems and their role in motivating employee performance.
Capital Structure
The document discusses various aspects of capital structure including:
- Defining capital structure and the components that make up a company's financial structure
- Approaches to determine the appropriate capital structure such as EBIT-EPS, valuation, and cash flow approaches
- The concept of optimal capital structure which maximizes share price value and minimizes cost of capital
- Different forms of capital structure such as equity only, combinations of equity and debt, etc.
- The concepts of leverage including operating, financial, and combined leverage and how they impact risk and returns
Operating, financial and combined leverage
This document discusses different types of leverage used in business - operating, financial, and combined leverage. Operating leverage is related to fixed operating costs and how they magnify changes in sales on earnings. Financial leverage uses fixed financing costs to magnify the effect on earnings per share. Combined leverage is the product of operating and financial leverage. Degrees of leverage are defined to quantify the effects. Indifference points are discussed as the earnings level where leveraged vs unleveraged financing plans yield equal shareholder returns. Analysis of earnings-per-share for different financing options is based on expected earnings levels relative to the indifference point.
Finance
The document provides an overview of various topics related to finance including the meaning of finance, the history of finance, types of finance such as public, private, and personal finance, and details on key areas within each type including corporate finance, taxation, investment, insurance, and retirement planning. Finance is broadly defined as the study and management of money, banking, credit, investments, and how individuals and organizations raise and manage funds.
Earning Per Share
Earnings per share (EPS) is used by investors and analysts to assess a company's performance over time and compare it to other companies. Basic EPS is calculated by taking net profit minus preferred dividends and dividing it by the number of common shares outstanding. Diluted EPS accounts for all convertible securities like options, warrants, and preferred shares that could be converted to common stock, which would result in more shares outstanding and a lower EPS. Calculating diluted EPS involves determining the equivalent number of common shares those convertible securities represent and adjusting the net profit and share count accordingly.
International Transfer Pricing Methods
There are several methods for setting transfer prices between divisions of a company: cost-based transfer pricing uses costs of production; market-based transfer pricing uses market prices; and negotiated transfer pricing involves negotiation between divisions. Transfer pricing policies can affect employees, shareholders, management, and competitors by impacting divisional profits and market competition. The transfer price is an accounting expense and revenue used between divisions without cash flow changing hands.
Financial Statement Analysis
This document provides an overview of financial ratio analysis. It introduces four categories of ratios - liquidity, activity, leverage, and profitability - and discusses specific ratios within each category. These ratios are used to analyze a company's performance in areas like managing working capital and inventory, use of financial leverage, and overall profitability. The document also describes the DuPont system for performing a complete ratio analysis using return on assets and return on equity.
Cash Management
This document discusses various techniques for managing cash flows and collections. It begins by emphasizing the importance of cash for business survival. It then defines cash management and discusses its focus on profitability, liquidity, and safety. Several techniques for accelerating cash collections are outlined, including lockbox systems, electronic payments, and preauthorized checks. Methods for managing payments like pay-through drafts and delaying payments are also covered. The document provides a detailed overview of tools and strategies for optimizing cash flows.
Notes on esop
The document provides an overview of employee stock option plans (ESOPs) in India, including:
1) It describes the key aspects of ESOPs such as granting employees the right to purchase company shares in the future at a preset price, and how this can create wealth for employees as share prices appreciate over time.
2) It outlines the legal and regulatory framework for ESOPs in India, including guidelines from SEBI, the Companies Act, taxation rules, and accounting standards.
3) It discusses important considerations for companies in designing an ESOP scheme such as objectives, eligibility, pricing, vesting periods, and approvals required.
Payroll accounting
Here are the key steps involved in payroll calculations:
1. Calculate basic salary as per employment terms
2. Calculate allowances like HRA, travel allowance, LTA as per company policy and income tax rules
3. Calculate statutory deductions like PF, ESI as prescribed percentages of basic pay
4. Calculate non-statutory deductions like income tax as per applicable tax slabs and rules
5. Calculate other benefits like leave encashment, bonuses, incentives if any
6. Generate payslip showing calculations of gross pay, deductions and net pay
7. Process payment to employees and file statutory returns
The payroll software automates these calculations to ensure accuracy as per rules. It is important to
Branch accounts
In order to increase the sales, business houses are required to market their products over a larger territory and may generally split their business into certain divisions or parts, if the various certain divisions or parts, if the various parts or divisions are located in different parts of the same city as Chandni chowk, Karol bagh, Connaught place, Nehru place (in delhi) or in different cities of the same country as Calcutta, Chennai, Mumbai, Kanpur and Delhi (in india) or in different countries (in the world) as Canada, USA, England, Japan, U.S.S.R and Germany, these are known as branches, head office contracts the activities of various branches
Responsibity centres
This document discusses responsibility centers, which are organizational units headed by managers responsible for their activities. There are four types of responsibility centers: cost centers, where managers are accountable for controlling costs; revenue centers, where managers are accountable for generating revenue; profit centers, where managers are responsible for both revenues and costs; and investment centers, where managers are accountable for generating revenue, controlling costs, and creating investment returns. Each type is evaluated based on different metrics like costs, revenues, profits, or returns on investment.
Responsibility accounting - Part A
Bangalore University - M.Com III Sememster - Accounting and Taxation specialization - Accounting for Managerial Decisions (AMD) - Module 3 - Responsibility Accounting and Divisional Performance Measurement - Theory with Formats and examples.
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Responsibility centers
There are 3 types of responsibility centers - cost centers, profit centers, and investment centers. A cost center manager is responsible only for costs, a profit center manager is responsible for both revenues and costs, and an investment center manager is responsible for revenues, costs, and investments. Responsibility accounting provides managers with budget and actual cost comparisons to evaluate performance. Return on investment is considered the best performance measure as it shows how effectively a manager uses available assets.
Marginal and absorption costing
Marginal costing is an alternative to absorption costing. Under marginal costing, only variable costs are charged as cost of sales and contribution is calculated. Fixed costs are treated as period costs. Contribution is the difference between sales revenue and variable costs, and it goes towards recovering fixed costs and generating profit. The key principles of marginal costing are that fixed costs do not change with volume, so increasing or decreasing sales only impacts profits by the amount of the variable cost per unit. Inventory is valued at marginal/variable cost under marginal costing.
labour cost control
This document discusses labour cost control and labour cost management. It defines direct and indirect labour and explains different types of wages payment systems like time wage, piece wage and incentive wage systems. It also discusses factors for labour cost control like labour records, control of production methods and labour cost analysis. Methods to measure and control labour turnover are provided. The roles of different departments in labour cost management are outlined.
Cost volume-profit analysis
Cost-volume-profit (CVP) analysis is a technique used to analyze the relationship between costs, volume, and profits. It uses linear equations to model how total costs and revenues change with production volume. CVP breaks down costs into fixed and variable components and calculates the break-even point, where total revenues equal total costs. It also determines the contribution margin of each unit and how many units must be sold to cover fixed costs. CVP analysis is useful for short-term decision making but assumes costs and prices remain constant, which limits its effectiveness for long-term planning.
Introduction to computerised accounting
MEANING OF COMPUTERISED ACCOUNTING
TRADITIONAL/MANUAL SYSTEM OF ACCOUNTING
PROCESS OF COMPUTERISED ACCOUNTING
FEATUERES OF COMPUTERISED ACCOUNTING
ADVANTAGES AND DISADVANTAGES OF COMPUTERISED ACCOUNTING
PROCESS/STEPS IN COMPUTERISED FINANCIAL ACCOUNTING
ADVANTAGES OF THE COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
VARIOUS COMPONENTS OF A COMPUTERISED FINANCIAL ACCOUNTING SYSTEM
DIFFERENCE BETWEEN MANUAL ACCOUNTING SYSTEM AND COMPUTERISED ACCOUNTING
Time Value of Money (Financial Management)
The document discusses different types of interest rates and annuities. It defines simple interest as interest paid only on the principal amount, while compound interest is interest paid on both previous interest and principal. An annuity is a series of equal payments over a period of time, with ordinary annuities having payments at the end of periods and annuity dues having payments at the beginning. The document also discusses calculating future and present values of these different financial instruments using standard formulas.
Financial Management Slides Ch 20
This document discusses various types of long-term debt instruments, preferred stock, and common stock. It defines key terms related to bonds such as par value, coupon rate, maturity, and bond ratings. It describes different types of bonds including debentures, subordinated debentures, income bonds, junk bonds, mortgage bonds, and equipment trust certificates. The document also discusses preferred stock features like cumulative and participating dividends. Finally, it covers common stock terms like authorized shares, issued shares, outstanding shares, book value, and liquidating value.
MASTER BUDGET
The document provides information about a master budget, including:
- A master budget aggregates all lower-level budgets from a company's functional areas and includes budgeted financial statements, cash forecasts, and financing plans. It typically covers an entire fiscal year.
- Key components of a master budget include sales budgets, production budgets, expense budgets, overhead and production cost budgets, and budgeted financial statements.
- Management uses the master budget to plan and direct all aspects of a company's future operations, including sales, production, expenses, investments, and financing. It is the central planning tool that guides a company's strategic goals and resource allocation.
Creditors and accounts payable
A creditor is a party that is owed money or services by another party called a debtor. Accounts payable refers to money a business owes its suppliers. There are internal controls in place for accounts payable like segregation of duties to prevent fraud. Auditors examine documentation supporting payments made to verify expenses.
Topic 4
This document discusses performance management. It begins by defining performance measurement and management. It then discusses limitations of traditional performance measurement systems and introduces the Balanced Scorecard as an alternative framework. The Balanced Scorecard uses financial and non-financial metrics across four perspectives: financial, customer, internal processes, and learning and growth. It links objectives and measures across these perspectives to translate strategy into action. The document also discusses measuring performance for service organizations and non-profits using frameworks like the Results and Determinants model and Balanced Scorecard. It concludes by covering reward systems and their role in motivating employee performance.
Capital Structure
The document discusses various aspects of capital structure including:
- Defining capital structure and the components that make up a company's financial structure
- Approaches to determine the appropriate capital structure such as EBIT-EPS, valuation, and cash flow approaches
- The concept of optimal capital structure which maximizes share price value and minimizes cost of capital
- Different forms of capital structure such as equity only, combinations of equity and debt, etc.
- The concepts of leverage including operating, financial, and combined leverage and how they impact risk and returns
Operating, financial and combined leverage
This document discusses different types of leverage used in business - operating, financial, and combined leverage. Operating leverage is related to fixed operating costs and how they magnify changes in sales on earnings. Financial leverage uses fixed financing costs to magnify the effect on earnings per share. Combined leverage is the product of operating and financial leverage. Degrees of leverage are defined to quantify the effects. Indifference points are discussed as the earnings level where leveraged vs unleveraged financing plans yield equal shareholder returns. Analysis of earnings-per-share for different financing options is based on expected earnings levels relative to the indifference point.
Finance
The document provides an overview of various topics related to finance including the meaning of finance, the history of finance, types of finance such as public, private, and personal finance, and details on key areas within each type including corporate finance, taxation, investment, insurance, and retirement planning. Finance is broadly defined as the study and management of money, banking, credit, investments, and how individuals and organizations raise and manage funds.
Earning Per Share
Earnings per share (EPS) is used by investors and analysts to assess a company's performance over time and compare it to other companies. Basic EPS is calculated by taking net profit minus preferred dividends and dividing it by the number of common shares outstanding. Diluted EPS accounts for all convertible securities like options, warrants, and preferred shares that could be converted to common stock, which would result in more shares outstanding and a lower EPS. Calculating diluted EPS involves determining the equivalent number of common shares those convertible securities represent and adjusting the net profit and share count accordingly.
International Transfer Pricing Methods
There are several methods for setting transfer prices between divisions of a company: cost-based transfer pricing uses costs of production; market-based transfer pricing uses market prices; and negotiated transfer pricing involves negotiation between divisions. Transfer pricing policies can affect employees, shareholders, management, and competitors by impacting divisional profits and market competition. The transfer price is an accounting expense and revenue used between divisions without cash flow changing hands.
Financial Statement Analysis
This document provides an overview of financial ratio analysis. It introduces four categories of ratios - liquidity, activity, leverage, and profitability - and discusses specific ratios within each category. These ratios are used to analyze a company's performance in areas like managing working capital and inventory, use of financial leverage, and overall profitability. The document also describes the DuPont system for performing a complete ratio analysis using return on assets and return on equity.
Cash Management
This document discusses various techniques for managing cash flows and collections. It begins by emphasizing the importance of cash for business survival. It then defines cash management and discusses its focus on profitability, liquidity, and safety. Several techniques for accelerating cash collections are outlined, including lockbox systems, electronic payments, and preauthorized checks. Methods for managing payments like pay-through drafts and delaying payments are also covered. The document provides a detailed overview of tools and strategies for optimizing cash flows.
Notes on esop
The document provides an overview of employee stock option plans (ESOPs) in India, including:
1) It describes the key aspects of ESOPs such as granting employees the right to purchase company shares in the future at a preset price, and how this can create wealth for employees as share prices appreciate over time.
2) It outlines the legal and regulatory framework for ESOPs in India, including guidelines from SEBI, the Companies Act, taxation rules, and accounting standards.
3) It discusses important considerations for companies in designing an ESOP scheme such as objectives, eligibility, pricing, vesting periods, and approvals required.
Payroll accounting
Here are the key steps involved in payroll calculations:
1. Calculate basic salary as per employment terms
2. Calculate allowances like HRA, travel allowance, LTA as per company policy and income tax rules
3. Calculate statutory deductions like PF, ESI as prescribed percentages of basic pay
4. Calculate non-statutory deductions like income tax as per applicable tax slabs and rules
5. Calculate other benefits like leave encashment, bonuses, incentives if any
6. Generate payslip showing calculations of gross pay, deductions and net pay
7. Process payment to employees and file statutory returns
The payroll software automates these calculations to ensure accuracy as per rules. It is important to
Branch accounts
In order to increase the sales, business houses are required to market their products over a larger territory and may generally split their business into certain divisions or parts, if the various certain divisions or parts, if the various parts or divisions are located in different parts of the same city as Chandni chowk, Karol bagh, Connaught place, Nehru place (in delhi) or in different cities of the same country as Calcutta, Chennai, Mumbai, Kanpur and Delhi (in india) or in different countries (in the world) as Canada, USA, England, Japan, U.S.S.R and Germany, these are known as branches, head office contracts the activities of various branches
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Similar to Responsibility accouting
Responsibity centres
This document discusses responsibility centers, which are organizational units headed by managers responsible for their activities. There are four types of responsibility centers: cost centers, where managers are accountable for controlling costs; revenue centers, where managers are accountable for generating revenue; profit centers, where managers are responsible for both revenues and costs; and investment centers, where managers are accountable for generating revenue, controlling costs, and creating investment returns. Each type is evaluated based on different metrics like costs, revenues, profits, or returns on investment.
Responsibility accounting - Part A
Bangalore University - M.Com III Sememster - Accounting and Taxation specialization - Accounting for Managerial Decisions (AMD) - Module 3 - Responsibility Accounting and Divisional Performance Measurement - Theory with Formats and examples.
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERS
Module - Background
TRANSFER PRICING AND RESPONSIBILITY CENTERS
Modular Learning Objectives
Keep the following objectives in mind as you work through the material in this module:
· Define the role of responsibility accounting.
· Differentiate between controllable and uncontrollable costs.
· Analyze structure of a decentralized organization.
· Define profit centers, cost centers, and investment centers.
· Compute transfer prices.
· Identify three main transfer pricing approaches.
Required Reading
This module covers the role of responsibility accounting and responsibility centers. Explore these topics further while keeping the above six objectives in mind. Click on the three arrows to explore each topic in more detail:
The term responsibility accounting refers to an accounting system that collects, summarizes, and reports accounting data relating to the responsibilities of individual managers. A responsibility accounting system provides information to evaluate each manager on the revenue and expense items over which that manager has primary control (authority to influence).
A responsibility accounting report contains those items controllable by the responsible manager. When both controllable and uncontrollable items are included in the report, accountants should clearly separate the categories. The identification of controllable items is a fundamental task in responsibility accounting and reporting.
To implement responsibility accounting in a company, the business entity must be organized so that responsibility is assignable to individual managers. The various company managers and their lines of authority (and the resulting levels of responsibility) should be fully defined. Not all managers have equal authority and responsibility. The degree of a manager’s authority varies from company to company.
The controllability criterion is crucial to the content of performance reports for each manager. For example, at the department supervisor level, perhaps only direct materials and direct labor cost control are appropriate for measuring performance. A plant manager, however, has the authority to make decisions regarding many other costs not controllable at the supervisory level, such as the salaries of department supervisors. These other costs would be included in the performance evaluation of the store manager, not the supervisor.
Watch this short video to further explain the concept of responsibility accounting. https://www.youtube.com/watch?time_continue=1&v=EsS0socI3I4
Decentralization is the dispersion of decision-making authority among individuals at lower levels of the organization. In other words, the extent of decentralization refers to the degree of control that segment managers have over the revenues, expenses, and assets of their segments. When a segment manager has control over these elements, the investment center concept can be applied to the segment. Thus, the more decentralized the decision-making is in an organization the more appli ...
Responsibility accounting
Responsibility accounting assigns responsibility for controlling costs to individuals within an organization. Large businesses are divided into responsibility centers to give managers clearer areas of control. There are four main types of responsibility centers: cost centers, where managers control expenses but not revenues; profit centers, where managers control both revenues and costs; revenue centers, where managers aim to maximize sales; and investment centers, where managers are responsible for profits and asset usage.
Responsibility accounting
Responsibility accounting is a system that assigns revenues and costs to responsibility centers based on who has responsibility over that area. It collects both planned and actual accounting information for these centers. Key features include identifying responsibility centers, assigning controllable costs, setting targets, comparing actual to planned performance, and reporting deviations. Responsibility centers can be cost centers, profit centers, or investment centers depending on if they are responsible for costs, revenues, or both. This system aims to improve performance by assigning responsibility and enabling better planning, control, decision-making, and management by exception. However, it requires proper organizational structure and delegation for successful implementation.
Centers
Anivesh Goyal from Prestige Institute of Management presented on responsibility centers, cost centers, and profit centers. A responsibility center is a subunit of a company where a manager is responsible. Cost centers focus only on controlling costs, while profit centers control both costs and revenues. Key advantages of these centers include decentralized decision making, performance comparisons, and increased staff interest.
Responsibilty Centers.pptx
Responsibility centers divide an organization into segments or units for which a manager is responsible for goals and objectives. This allows for decentralized decision making, improved accountability, and motivation of managers. However, responsibility centers can also create conflicts of interest between units and make coordination and cost allocation complex. An effective system balances these benefits with the potential disadvantages.
Chapter 10 : Responsible Accounting
Responsibility accounting involves dividing an organization into responsibility centers and assigning costs and revenues to each center. The key types of responsibility centers are cost centers, which managers are responsible for costs, profit centers where managers are responsible for both costs and revenues, and investment centers where managers are responsible for costs, revenues, and capital employed. Effective responsibility accounting requires setting targets for each center, tracking actual performance against targets, reporting variances to management, and taking corrective actions. It aims to evaluate performance and provide feedback to improve future operations.
Responsbility Accounting Transfer Pricing.ppt
This document discusses responsibility accounting and responsibility centers. It defines different types of responsibility centers such as cost centers, revenue centers, profit centers, and investment centers. Cost centers are used to track costs, revenue centers track revenue, profit centers track both costs and revenues, and investment centers evaluate performance based on investments and revenues. The document also covers coordination among responsibility centers, performance measurement, factors that affect performance like coordination, integration, transfer pricing, and management information systems.
Responsibility centers
This document discusses responsibility centers, which are organizational units for which a manager is responsible. It provides examples like a store or workstation. Attributes are discussed, noting a responsibility center operates like a small business promoting the larger organization's interests. Goals should be specific, measurable, and compatible. Financial controls like costs, revenues, and profits are used to measure contributions which vary by unit. Effectiveness means achieving intended results while efficiency means output per input. Different types of responsibility centers are outlined, including cost centers measured by input, expense centers with no output relation, revenue centers responsible for sales, and profit centers with complete decision-making evaluated on profits.
PERFORMANCE EVALUATION DECISIONS.docx
Management Accounting studies the preparation and use of cost accounting information for managerial decision-making and control purposes. This course provides students with the tools needed to understand and address the important problems facing management accountants today. In order to keep up with the class, students should go over the relevant chapters and problems prior to each class. This must then be followed by a more in-depth review of the material and practice of problems after the class.
Responsibility Accounting
responsibility accounting- meaning and definition-objectives- advantages and disadvantages -profit centers
presentation on responsibility accounting
This document provides an overview of responsibility accounting including its meaning, features, types of responsibility centers, transfer pricing methods, and advantages. Key points:
- Responsibility accounting assigns revenues and costs to those responsible and divides organizations into responsibility centers like cost, profit, and investment centers.
- It uses both planned and actual data, identifies controllable vs. uncontrollable costs, and determines transfer prices for goods exchanged internally.
- Responsibility accounting improves performance, aids cost planning, enables delegation while retaining control, and holds individuals accountable for results.
Financial performance evaluation parameters
1. Responsibility accounting is a system that measures the results of responsibility centers and compares them to expected outcomes. It helps managers record plans and performance.
2. There are four main types of responsibility centers: revenue centers, which measure output in monetary terms; cost centers, which measure inputs in monetary terms; profit centers, which measure both inputs and outputs; and investment centers, which measure inputs, outputs, and assets.
3. Key performance metrics for responsibility centers include return on investment, residual income, return on assets, and economic value added. These metrics help evaluate managerial performance based on profitability and investment.
Responsibility accounting
Responsibility accounting is a management control system that delegates authority and responsibility to managers of responsibility centers. It collects planned and actual accounting data on inputs (costs) and outputs (revenues) of responsibility centers. The goals of responsibility accounting are to measure divisional performance, evaluate manager performance, and motivate managers to achieve organizational goals. It enables easy identification of responsible managers and provides relevant and timely information for planning, control, and decision-making. Responsibility centers can be cost centers, which measure only inputs, profit centers, which measure both inputs and outputs, and investment centers. Responsibility accounting reports provide budgeted and actual data in a timely manner to assist managers in identifying variances.
Management Accounting- Responsibility Accounting
Responsibility accounting is used to assign accountability for costs to managers of responsibility centers. It collects planned and actual accounting data on inputs and outputs of these centers. This allows organizations to determine where costs are incurred and who is responsible. It also measures the efficiency of centers and managers through variances. There are three main types of responsibility centers - cost centers, which are accountable for expenses; profit centers, which are accountable for both revenues and expenses; and investment centers, which are accountable for profits and returns on capital employed.
Mcs DRGORAD
This document contains an assignment response that discusses and provides examples of Economic Value Added (EVA) analysis and different types of expense centers. For EVA analysis, it explains how EVA is calculated by determining net operating profit after taxes and subtracting the cost of capital. It provides an example calculation. The response also outlines advantages and disadvantages of EVA analysis. Regarding expense centers, it distinguishes between engineered and discretionary expense centers. Engineered centers have outputs that can be estimated, while discretionary centers rely more on management judgment. It provides a diagram to illustrate the relationship between inputs and outputs for an engineered center.
Assignment Responsibility Center Presentation.ppt
This document discusses different types of responsibility centers, including centers of cost, centers of revenue, profit centers, and investment centers. It describes how each center controls different aspects like costs, revenues, or investments. The document also covers topics like evaluating responsibility centers based only on the factors they control, using performance measures to influence rather than just evaluate, and how incremental analysis examines relevant revenues and expenses to make the best decisions.
Responsibility Accounting.doc
Notes on Responsibility Accounting ,Management Accounting ,Cost Center,Profit Center, Investment Center.Advantages to the Company .Responsibility accounting is one of the important control systems in large companies. This system comprises of responsibilities, accountability and performance evaluation. It measures the performance of various divisions of an organization.Responsibility accounting is a method of collecting and reporting both budgeted and actual costs and revenue by divisional managers who are responsible for it. Budgeting and standard costing are important part of responsibility accounting.
Management accounting
The document defines management accounting and discusses its objectives and advantages. It states that management accounting provides economic information to managers to help achieve organizational goals. It covers areas like planning, decision making, and controlling. The objectives of management accounting include planning, interpretation, decision making, controlling, reporting, organizing operations, and facilitating coordination. Responsibility accounting measures inputs and outputs of responsibility centers like cost centers, profit centers, and investment centers. Budgets and budgetary control involve establishing budgets for functions and divisions and comparing actuals to budgets to take corrective actions. Types of budgets include sales, production, purchase, research and capital expenditure budgets.
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Responsibility accouting
- 2. Responsibility Accounting is a management system that aims to develop performance measures by which segment managers are evaluated. The essence of responsibility accounting is to communicate the right information to the right person at the right time.
- 3. Relating to the responsibilities of individual managers. To evaluate managers on controllable items. An accounting system that provides information . . .
- 4. A subunit in an organization that is headed by a responsible manager. A subunit in an organization that is headed by a responsible manager.
- 5. Under responsibility accounting responsibility centers are broadly categorized as: Cost centers – segments whose managers are held responsible only for costs but not for revenue or investments. Revenue centers- segment is responsible for the revenue of particular unit or center. Profit centers – segments whose managers are held responsible for both costs and revenues but not for investments. Investment centers – segments whose managers are held responsible for the capital invested as well as the profits made in the segment.
- 6. Cost CenterCost Center SSegment hasegment has control overcontrol over the incurrencethe incurrence of costs.of costs. Cost CenterCost Center SSegment hasegment has control overcontrol over the incurrencethe incurrence of costs.of costs. The Paint DepartmentThe Paint Department in an automobile plant.in an automobile plant. RevenueRevenue CenterCenter SegmentSegment is responsibleis responsible for the revenuefor the revenue of a unit.of a unit. RevenueRevenue CenterCenter SegmentSegment is responsibleis responsible for the revenuefor the revenue of a unit.of a unit. The ReservationsThe Reservations Department of an airline.Department of an airline.
- 7. Profit CenterProfit Center Segment hasSegment has control overcontrol over bothboth costs andcosts and revenues.revenues. Profit CenterProfit Center Segment hasSegment has control overcontrol over bothboth costs andcosts and revenues.revenues. Company-owned restaurantCompany-owned restaurant in a fast-food chain.in a fast-food chain. InvestmentInvestment CenterCenter Segment hasSegment has control overcontrol over profits andprofits and invested capital.invested capital. InvestmentInvestment CenterCenter Segment hasSegment has control overcontrol over profits andprofits and invested capital.invested capital. A division of aA division of a large corporation.large corporation.
- 8. CostCost standardsstandards CostCost standardsstandards Contribution income statement Contribution income statement Rate of returnRate of return on investedon invested fundsfunds Rate of returnRate of return on investedon invested fundsfunds Evaluation ToolEvaluation Tool CostCost CenterCenter CostCost CenterCenter InvestmentInvestment CenterCenter InvestmentInvestment CenterCenter Profit Center Profit Center
- 9. Cost Responsibility Reports Responsibility Reports Prepared for each individual who has control over revenue or expense items