3. LEARNING OBJECTIVES
Need to Know About Accounting
Managerial Accounting
Financial Statements - Balance Sheet,
Income Statement
Managerial Accounting - Dr. Varadraj Bapat
4. Need to Know About Accounting
Need to Know About Accounting and
Finance
Managerial Accounting - Dr. Varadraj Bapat
5. “Why do I need to learn about finance …
I am very good in my
own area of specialization”
How would you react to the above
statement?
Managerial Accounting - Dr. Varadraj Bapat
6. The job content
Management
As & Finance
you Expertise
mo
ve
up
.. Functional
Expertise
Managerial Accounting - Dr. Varadraj Bapat
7. About Managerial Accounting
What is Accounting?
Financial Accounting, Cost Accounting and
Management Accounting
Financial Accounting and Financial
Management
Finance and complexity of organisation
Managerial Accounting - Dr. Varadraj Bapat
8. Accounting
Language of Business
Performance is reported and
evaluated in financial terms
Knowledge is useful for
personal investment and tax
planning as well
Managerial Accounting - Dr. Varadraj Bapat
9. Accounting
It is not necessary to become
accountant
But its very useful if every one
understands the accounting
and financial concepts and
terminology properly
Managerial Accounting - Dr. Varadraj Bapat
10. Need to Learn Accounting
Itassists in management
Will help in planning,
organisation and control of
business
Leads to increase in efficiency of
business
Profit maximization
Managerial Accounting - Dr. Varadraj Bapat
11. Streams of Accounting
Financial Accounting, Cost
Accounting and Management
Accounting
Let us understand the
similarities and difference in
these three streams of
accounting
Managerial Accounting - Dr. Varadraj Bapat
12. Financial Accounting
Recording of Financial
Transactions
Reporting of Financial Results
Preparation of Financial
Statements
Targeted to External Users
Managerial Accounting - Dr. Varadraj Bapat
13. Cost Accounting
Recording of Costs
Analysis of Costs
Preparation of Cost
Statements
Targeted to Internal Users
Managerial Accounting - Dr. Varadraj Bapat
14. Management Accounting
Recording of Financial & other
data
Analysis of Financial and other
information
Preparation of Statements for
Managerial Decisions
Managerial Accounting - Dr. Varadraj Bapat
15. Management Accounting
Targeted to Internal Users -
All levels of Management
This is a broader concept
encompasses Financial and
Cost Accounting
Managerial Accounting - Dr. Varadraj Bapat
16. Meaning of Management
Accounting
Any form of accounting which
enables a business to be
conducted more efficiently can
be regarded as Management
Accounting. (Institute of
Chartered Accountants of India-
ICAI)
Management Accounting is the
Managerial Accounting - Dr. Varadraj Bapat
17. application of professional
knowledge and skill in the
preparation of accounting
information in such a way as to
assist management in the formation
of policies and in the planning and
control of operations of undertaking.
(International Capital Market
Association, London- ICMA)
Managerial Accounting - Dr. Varadraj Bapat
18. Financial Management
Financial Accounting, Managerial
Accounting and Financial
Management: Relationship
Financial Management deals with
raising and utilization of funds
Raising of funds may include
Cost of Capital, Capital Structure
Managerial Accounting - Dr. Varadraj Bapat
19. Financial Management
decisions, Capital Markets, IPOs
and so on
Financial Management deals with
raising and utilization of funds
Utilization of funds may include
Capital Budgeting, Portfolio
Management, Working Capital
Management and so on
Managerial Accounting - Dr. Varadraj Bapat
20. Managerial V/s Financial
Accounting
Accounting System
(accumulates all
accounting data)
Managerial Accounting Financial Accounting
Information for decision Published financial
making, and control statements and other
of an organization’s financial reports.
operations.
Internal External
Users Users
Managerial Accounting - Dr. Varadraj Bapat
21. Complexity of Organisation
Finance and complexity of
organisation
As the organizations grow, they
become complex
Ownership and Management are
separated
Managerial Accounting - Dr. Varadraj Bapat
22. Complexity of Organisation
Ownership is widespread
This increases the importance of
Finance function
Managerial Accounting - Dr. Varadraj Bapat
23. About this course
Managerial Accounting Course
The course will cover Financial
Accounting, Cost Accounting
and Management Accounting
Financial Management is dealt
in a different course
Managerial Accounting - Dr. Varadraj Bapat
24. Financial Statements
What are they?
Which are important Financial
Statements?
What purposes do they serve?
Managerial Accounting - Dr. Varadraj Bapat
25. Company or Organisation
PROVIDERS RESOURCES
OF FOR
MONEY BUSINESS
These two are
always equal
Managerial Accounting - Dr. Varadraj Bapat
26. The Basic Business Model
Infrastructure
The
Money
Money Collection
Cycle Procurement
Billing
Value
Consumption
Addition Delivery
Cycle
People
Managerial Accounting - Dr. Varadraj Bapat
27. Infrastructure
Money
Collection Costs
Procurement
Billing
Consumption
Delivery
To be profitable, our revenue should be more than
our cost ! This would make the organisation
stronger, healthy and long-lasting.
Managerial Accounting - Dr. Varadraj Bapat
28. Balance Sheet Profit & Loss Account
Liabilities Assets Infrastructure Revenue
Capital Costs
Fixed Assets Money
Borrowings from Collection
Banks / FIs Current Assets
Procurement
or Working Outstanding
Current & Inventory
Capital
Liabilities
Consumption Profit/ Loss
Delivery &
& WIP
Human Assets Billing
People
Balance Sheet shows the financial position of
organisation, while Profit & loss Account shows
the profitability of organisation.
Managerial Accounting - Dr. Varadraj Bapat
29. Balance Sheet shows the
cumulative position of resources
(assets) and sources of funds
(liabilities) at the end of the year.
Profit & Loss Account shows
‘Revenue & Cost’ performance
during a quarter/ year.
Managerial Accounting - Dr. Varadraj Bapat
30. Balance Sheet Profit & Loss Account
Liabilities Assets
Infrastructure Revenue
Capital Costs
Reserves Fixed Assets Money
Borrowings Collection
(eg.from Banks) Current Assets
or Working Procurement
Outstanding
Current Capital & Inventory
Liabilities
Consumption Profit
Delivery &
& WIP
Human Assets Billing
People
Profits build up reserves & enable an
enterprise to acquire new assets without
borrowing money. Exactly the way we can
acquire assets for our use without borrowing.
Managerial Accounting - Dr. Varadraj Bapat
31. Balance Sheet Profit & Loss Account
Liabilities Assets
Infrastructure Revenue
Capital Costs
Fixed Assets
Reserves Money
Borrowings Collection
Current Assets
(eg.from Banks)
or Working Procurement
Capital Outstanding
Current & Inventory
Liabilities
Consumption Profit
Delivery &
Human Assets & WIP
Billing
People
Profits build up reserves & enable an enterprise to acquire
new assets without borrowing money. Exactly the way we
can acquire assets for our use without borrowing.
Managerial Accounting - Dr. Varadraj Bapat
32. Balance sheet may be prepared
at any time showing the position
as on that date.
Profit and loss account may be
prepared for any particular
period.
Managerial Accounting - Dr. Varadraj Bapat
33. Balance Sheet
Owners Funds Fixed Assets
Non Current Non Current
liabilities Investments
Current Other non
liabilities current assets
Current
Assets
Managerial Accounting - Dr. Varadraj Bapat
34. The Annual Report
Usually Contains ...
– financial statements which consist
of
• Balance sheet, Profit & Loss A/c
• Cash Flow Statements
• notes to the financial statements
• disclosure of accounting policies
Managerial Accounting - Dr. Varadraj Bapat
35. The Annual Report
Usually Contains ...
- Chairman’s Statement
- Board of Directors & Committees
- Directors Report
- Directors Responsibility Statement
- Auditors Report
- Report on Corporate Governance
Managerial Accounting - Dr. Varadraj Bapat
36. The Annual Report
Usually Contains ...
- Disclosure regarding Employee
Stock options Schemes
- List of employees receiving
remuneration exceeding Rs. 60
Lakhs
- Conservation of Energy Reports
Managerial Accounting - Dr. Varadraj Bapat
37. The Annual Report
Usually Contains ...
- Consolidated Financial Statements
- Subsidiaries Financial Statements
- Management Discussion and
Analysis
- Annual General Meeting Notice
Managerial Accounting - Dr. Varadraj Bapat