Nisha Management Ppt

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PRESENTATION

DIFFERENCE BETWEEN

FINANCIAL,MANAGEMENT ANDCOST ACCOUNTING


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TEAM MEMBERS NISHA SEHRAWAT

KOMAL PRIYARASHI AGARWAL


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WHAT IS ACCOUNTING ALLABOUT?

RECORDING + MEASURING

FINANCIAL TRANSACTIONS(Realated to money)

HELP IN ASSESINGTHE PERFORMANCEAND WEALTH


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What is cost accounting?

Cost accounting involves theaccumulation, recording and

reporting of costs and otherquantitative data. The informationgenerated by the cost accounting

system is used by an organisationfor internal purposes and externalpurposes.


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What is managemntaccounting?

According to the Chartered Institute of ManagementAccountants (CIMA), Management Accounting is"the process of identification, measurement,accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management

accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"
http://en.wikipedia.org/wiki/Chartered_Institute_of_Management_Accountantshttp://en.wikipedia.org/wiki/Chartered_Institute_of_Management_Accountantshttp://en.wikipedia.org/wiki/Chartered_Institute_of_Management_Accountantshttp://en.wikipedia.org/wiki/Chartered_Institute_of_Management_Accountants


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What is financial accounting?

Financial accountancy (or financialaccounting ) is the field of accountancy concerned with the preparation of financialstatements for decision makers, such asstockholders , suppliers , banks ,employees, government agencies ,

owners, and other stakeholders. Accounting equation=Assets+Liabilities
http://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Vendor_(supply_chain)http://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Government_agencieshttp://en.wikipedia.org/wiki/Government_agencieshttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Vendor_(supply_chain)http://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Accountancy


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Difference between financialand management accounting

FINANCIAL ACCOUNTING

External( Investors ,govern

mentauthorities,creditors)

Help investors, creditors,and others make

investment, credit, andother decisions

MANAGEMENTACCOUNTING

Internal(Managers of

business, employees)

Help managers plan andcontrol business

operations
http://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Investor


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Cont.

Financial accounting Highly aggregated

information about the

overall organization.

Must be accurate andtimely Compulsory under

company law is an end initself

Management accounting Disaggregated

information to support

local decisions.

Usually approximate butrelevant and flexible

except for fewcompanies, it is notmandatory Is a mean tothe end


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Cont

Financial accounting It provides information

about financial

performance and financialposition of the business. It classifies records,

presents and interprets

transactions in terms of money.

Management accounting It provides information of

ascertainments of costs

to control costs and for decision making aboutthe costs.

It classifies, records,

presents and interprets ina significant manner materials, labor andoverhead costs .
http://en.wikipedia.org/wiki/Overhead_(business)http://en.wikipedia.org/wiki/Overhead_(business)


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Cont

Financial accounting It is primarily concerned

with reporting for the

company as a whole.

Manangement accounting Segment reporting is the

primary emphasis


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Difference between financialand cost accounting

Financial accounting It records historical data. External users like

shareholders, creditors,financial analysts,government and itsagencies,etc.

It shows profit/loss of theorganization.

Cost accounting It records and presents

estimated, budgeted

data. It makes use of bothhistorical costs andpredetermined costs.

Used by Internal

management at differentlevels. It provides details of

costs and profit of eachproduct, process, job,etc.


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Cont.

Financial accounting They are prepared for a

definite period, usually a

year. A set format is used for

presenting financialinformation.

Cost accounting They are prepared as and

when required.

There are no set formatsfor presenting costinformations.


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Financial statements

INCOME STATEMENTBALANCE SHEETSTATEMENT OF CASH FLOWSTATEMENT OF

STAKEHOLDERS EQUITY


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Income statement The income statement reports a company's

profitability during a specified period of time. Theperiod of time could be one year, one month,three months, 13 weeks, or any other time

interval chosen by the company. The main components of the income

statement are revenues, expenses, gains,

and losses. Revenues include such thingsas sales, service revenues, and interestrevenue.


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Balance Sheet

The balance sheet is organized into threeparts: (1) assets, (2) liabilities, and (3)stockholders' equity at a specified date(typically, this date is the last day of anaccounting period).


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Statement of cash flow

The statement of cash flows explains thechange in a company's cash (and cashequivalents) during the time intervalindicated in the heading of the statement.

The change is divided into three parts: (1)operating activities, (2) investing activities,and (3) financing activities.


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Statement of shareholders

equity The statement of stockholders' (or

shareholders') equity lists the changes instockholders' equity for the same period asthe income statement and the cash flowstatement.

The changes will include items such as netincome, other comprehensive income,dividends, the repurchase of commonstock, and the exercise of stock options.


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Cost accounting

In cost accounting there are two types of costs:-

1. Variable cost2. Fixed cost


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Management accounting tools

Business metrics development Price modeling Product profitability Geographic vs. Industry or client segment reporting Cost benefit analysis Cost-volume-profit analysis Client profitability analysis IT cost transparency


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Nisha Management Ppt

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