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Introduction to Management and Cost Accounting
CHAPTER 1: INTRODUCTION TO MANAGEMENT AND COST ACCOUNTING
TYPES OF ACCOUNTING
1 0 Di ii n . en o f t Financial Accounting *0 The classification and recording of monetary transactions of an entity in accordance with established concepts, principles, accounting standards and legal requirements and presentation of a view of those transactions during and at the end of an accounting period *1 Focuses on reporting to external parties such as investors, government agencies, bank and suppliers *2 Measures and records business transaction and provides financial statement that are based on Generally accepted Accounting Principles (GAAP). Management Accounting *3 Provide information for internal users. Generally it is used by the manager in assisting them managing the company. Besides, it guides the manager how to choose, communicate and implement strategy. *4 It identifies, collects, measures, classifies, and reports information that is useful to managers in planning, controlling, and decision making
1 R eo t eC tM ae e tA o n n i o f h o / a gm c ut t n l s n n c a t e Ma ae e t h ngm n Pr cs oes 1. analyzes and reports financial and non financial information relating to the cost or using resources in an organization. activities or products. and the analysis of variances.Chapter 1 Introduction to Management and Cost Accounting Cost Accounting *5 The establishment of budgets. processes. Communication Aids the communication function by installing and maintaining an effective communication and reporting system. Organizing Consolidate the organizational structure. profitability or the social use of funds *6 Measures. standard costs and actual costs of operation. Planning Planning process : Helps to formulate future plans Budgeting process: providing data on past performance 2. 4. Control Producing performance report Assist the control function by providing prompt measurements of actions and identifying trouble areas. 2 . 1 . 3. Motivation Budgets and performance reports have an important influence on the motivation of the personnel of the organization Provide valuable assistance in identifying potential managerial problem areas and highlighting those items for detailed investigations. 5.
*15 reports what has happened in the past in an organization 7. within the organization Legal Requirements *8 entirely optional and information should be produced only if the benefits > cost Precision *9 approximate information is required rapidly for decision making Segments *11focuses on small parts of the organization. 3. outside the organization statutory requirements for public limited companies to produce annual reports *10 information must be reasonably accurate *12 describe the whole of the organization 1. departments Accepted Accounting Principles *13 can use whatever accounting rules that it finds the most useful for decision making Time Dimension *14 is concerned with future information as well as past information Report Frequency *16 management accounting reports on various accounts may be prepared at daily. 2 C prs n ew n a ae e t o ai o bt e M gm m e n n A o n n a d i a caA o n n c ut g n F ni l c ut g c i n c i Management Accounting Users of Information *7 Managers. 2.Chapter 1 Introduction to Management and Cost Accounting 1 . Individual product. • accounts are prepared to meet the requirements of the Companies Acts and Statements of Standard Accounting Practice 6. *17 a detailed set of financial accountings is published annually *18 less detailed accounts are published semi-annually 3 . activities. eg. weekly or monthly Financial Accounting • • Interested parties. 5. 4.