ACCOUNTING FOR MANAGEMANT

UNIT-1
1. DEFINE ACCOUNTING?
THE AMERICAN INSITUTE OF CERTIFIED PUBLIC ACCOUNTANTS define
accounting as “the art of recording, classifying, measuring and summarizing in a
significant manner and in terms of money, transactions and events which are, in part
at least of a financial character and interpreting the results thereof”.
2. WHAT ARE THE FUNCTIONS OF ACCOUNTING?
Recording
Classification
Summarizing
Transactions
Interpretation
3. WHAT ARE THE USERS OF ACCOUNTING?
Internal users: owners, management, employees.
External users: creditors, investors, government, consumers, research scholars.
4. WHAT IS MEANT BY A/C PRINCIPELS?
Accounting is the basic measuring the performance of the companies. The
methods adopted in measuring the performance should be common to all companies
so that all the interested parties can easily understand the method. Hence, common
accounting principles are adopted throughout the world to write the accounts. This
common accounting principle is referred to as generally accepted accounting
principles.
5. What are the two main objectives of a/c?
 To find out the profit or loss the a/c of business
 To find the out assets and liabilities of the company
 To know the details about the amount due by the business to various parties
and the amount to be received from various parties
 To provide information about the business to the business to the proprietors,
partners or shareholders
6. WHAT ARE THE CALSSIFICATION OF A/C PRINCIPLES?
1. accounting concepts
2. accounting conventions
7. WHAT IS MEANT BY DUAL ASFECT CONCEPT?
It means every transaction has two aspects. One is the receiving aspect and
another is payment aspect.
Dual aspect is the total debits will be equal to the total credits in an accounting
period.

8. WHAT IS MEANS BY ACCOUNTING CYCLE?

Accounting cycle refers to the continuous sequence of repeating the accounting
procedures every year. The accounting cycle includes the following:
a. recording the journals
b. posting the journal into ledger accounts
 c. prepare the final accounts

9. WHAT ARE THE TYPES OF ACCOUNTS?

a. personal a/c
b. real a/c
c. nominal a/c
10. RULES FOR ACCOUNTING?
1. Personal a/c: Debit is the receiver and Credit the giver.
2. Real a/c: debit what comes in and credit goes out.
3. Nominal a/c: debit expanses and loss and credit income and gains.
11. WHAT IS THE PROCEDURE FOR DOUBLE ENTRY SYSTEM?
The procedure of double entry system is: Recording in journals, posting into ledger,
preparation of trial balance and, preparation of final accounts.
12. WHAT ARE THE MAIN BRANCHES OF ACCOUNTING?
1. FIANCIALA/C
2. COST A/C
3. MANAGEMENTA/C
13. WHAT IS MEANT BY FIANCIAL A/C?
The process of identifying, measuring and communicating economic information
to permit inform judgment and decision by users of information.
14. WHAT IS MEANTS BY COST ACCOUNTING?
It is the branch of accounting the processing and evaluation of monitoring and
non monitoring data to provide information for external reporting, internal planning and
control of business operation and special analysis and decision.
15. WHAT ARE THE OBJECTIVES OF COSTING ACCOUNTING?
The important objectives of,
1. Ascertainment of cost.
2. Planning and control of cost.
3. Providing information for managerial decision making.
16.what are the types of costing?
1. Job costing 2.batch costing
3. Contract costing 4.process costing
5. Operation costing 6.singal or output costing
7. Operating costing
17. WHAT ARE THE TECHENIQUES OF COSTRING ACCOUNTING?
1. Historical costing 2.standard costing
3. Absorption costing 4.marginal costing
5. Uniform costing.
18. WHAT IS MEANS BY STANDARD COSTING?
They are incurred for the before production it is called standard costing. It helps
to management control the cost in all stages of production.
19. WHAT IS MEANT BY COST CENTRE AND COST UNIT?
Cost centre: it means a location, person or item of equipment for which cost may
be ascertained and used for the purpose of cost control.
Cost units: it is a unit of quantity of product, service or time in relation to which
cost may v ascertained or expressed.
20. WHAT IS JOURNAL?
Journal is otherwise called “subsidiary book or book of original entry”.
The recorded should be entre in first of all in the journal.
All the transition should be entre in to debit and credit.
21. WHAT IS MEANS BY HUMAN RESOURCES ACCOUNDING?
It is the most important factors of production among the factors of production of
men, material and land. The effective utilization of the other factors depends upon the
efficiency of human resource.
22. WHAT IS THE DEFINITION OF HR ACCOUNTING?
The American accounting association committee on are,” HRA is he process of
identifying and measuring data about human resources and communicating this
information to interested parties to facilitate effective management within the
organization”.
23. WHAT ARE THE METHODS OF HR ACCOUNTING?
Human resource cost accounting
Human resource value accounting
24. WHAT IS MEANS BY HRCA?
HRCA is concerned with the cost aspect involved in recruitment and maintaining
of human resources. It is ht process of measurement and reporting of the costs
incurred for the recruitment, training and replacement of employees in an organization.
It is just like ascertainment of cost for any other fixed assets of a concern.
25. WHAT ARE THE THREE MENTODS OF HRCA?
1. historical cost method
2. replacement cost method
3. opportunity cost method
26. WHAT IS MEANS BY MANAGEMENT ACCOUNTING?
Management accounting if the application of professional knowledge and skill in
the preparation of management accounting. It requires formation of polices and gains
the planning, control of the business activities.
27. WHAT ARE THE DIFFERENCE BERWEEN FIANCIAL A/C AND COSTING A/C
MANAGEMENT ACCOUNING?
COST ACCOUNTING:
It is providing information for the management.
It includes only operating activities.
There no time limit for preparation of accounts.
It is not provide external parties.
FINACIAL ACCOUNTING:
It is providing information external tithe management, shareholders,
debenture holders, creditors, government etc.
It concerns with operating and non- operating activities.
It is prepared for only for one year.
It include for profit and loss a/c and balance sheet.
MANAGEMENT ACCOUNTING:
It provides information to the management for decision making.
It aims at the future based on the past information.
28. WHAT IS MEANT BY HISTORICAL COST METHOD?
 Cost are incurred for the recruitment, training and developing he human
resourced of he organization. The present cost for recruitment and training of human
resources who are already employed will not be considered by this method.
29. WHAT IS MEANT FOR INFLATION ACCOUNTING?
The accounting system adopted for converting the past financial expenditure and
receipts according to be current price level is called inflation accounting. The
conversion of the past financial expenditure and receipts can be done by comparing
the current price index with the general price index of the years in which the
expenditure or receipts took place.
30. WHAT ARE THE METHODS OF PRICE LEVEL ACCOUNTING (INFLATION
ACCOUNTING)?
1. Current purchasing power method
2. Current cost accounting method
31. WHAT IS CPP METHOD?
The increase or decrease of price level in a period should be adjusted with the
items in the profit and loss account and balance sheet. The method based on the
general price index.
32. WHAT IS THE PROCEDURE FOR CPP METHOD?
Calculation of conversion factor
Calculation of converted value
33. WHAT MEANTS BY CCA METHOD?
It replaced with CCA method. The values of cost of goods sold, inventory, fixed
assts. Depreciation and working capital are properly ascertained to exhibit in a fair
manner as per the current price level.
34. WHAT IS THE CONTENT OF TRADING A/C?
Opening stock, purchases, direct expenses, sales, closing stock.
35. Profit and loss a/c?
This account id debited for expended and credited for income. The account
contains only revenue items .it would be credited for the gross profit and debited for
the gross loss. The debit side contains indirect expanses and credit for indirect
income. If a balance is a debited net loss and credit is net profit.
36. WHAT IS MEANT BY XLOSING ENTRIES?
If an account need not be carried forward to next accounting period, it should be
closed by transferring it to trading account or profit and loss account.

37. WHAT IS BALANCE SHEET?

It is a statement prepared to know the financial position. It is a statement and
should not be called as an account. It is otherwise called a statement of balances. It
represents the value of assets and liabilities for a particular period.
38. WHAT IS THE CONTENT OF BALANCE SHEETS?
It represented by assets and liabilities. Debit side is the liabilities and credit side
is assets.
39. LISTS OUT THE LIABILITIES?
Fixed liabilities:
Owner’s liabilities
Outsider’s liabilities
 Current liabilities: sundry creditors, BOD, bills payable, outstanding expanses
and income received in advance.
40. WHAT IS MEANTS BY ASSETS?
It is acquired out of own and borrowed liabilities.
a. fixed assets c. investments
b. current assets d. fictitious assets
41. WHAT IS TANGIBLE ASSETS?
The fixed assets which are seen and touched are called tangible fixed assets.( eg .
land building and machinery, furniture and fittings.)