Accounting for Management and Reporting Notes
Subject Overview
Accounting for Management and Reporting covers the accounting process and financial statement formats, cost accounting and marginal/
Subject at a glance
4
Units
32
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Accounting as an information system
- the accounting process
- concepts/conventions/principles
- role of the accountant
- branches of accounting (financial, cost, management) and their inter-relationships
- Schedule VI formats for public limited
- banking and insurance companies
Financial accounting
Records and reports to outsiders
Cost accounting
Ascertains and controls cost
Management accounting
Information for decisions
Study guide
This unit explains accounting as an information system: the accounting process, concepts, conventions, principles, the accountant's role, branches of accounting and company financial statement formats. Learn how financial, cost and management accounting differ.
- Meaning
- objectives
- scope and classification of costs
- cost sheet preparation
- marginal costing vs absorption costing
- cost-volume-profit and break-even analysis
- standard costing and variance analysis
- budgetary control — master/zero-base/fixed/flexible/participative/performance budgets
Contribution
Sales − variable cost
Break-even sales
Fixed cost / P/V ratio
Margin of safety
Actual sales − break-even sales
Material cost variance
Standard cost − actual cost
Labour efficiency variance
SR × (SH − AH)
Study guide
You study cost classification, cost sheets, marginal versus absorption costing, CVP and break-even analysis, standard costing and variances and budgetary control (master, zero-base, flexible, performance). Practise cost sheets and break-even problems.
- Concepts and objectives of financial analysis
- trend analysis
- common size and comparative statements
- ratio analysis (liquidity, solvency, profitability, turnover)
- cash flow and funds flow statements
Current ratio
Current assets / current liabilities
Debt-equity
Long-term debt / equity
Return on capital employed
EBIT / capital employed × 100
Inventory turnover
COGS / average inventory
Debtors collection period
Average debtors / credit sales × 365
Study guide
You study financial statement analysis: trend, common size and comparative statements, ratio analysis and cash flow and fund flow statements. Analyse the ratios of one listed company.
- Price level accounting
- human resource accounting
- transfer pricing
- target costing
- kaizen costing
- activity-based costing
- life cycle costing
- financial reporting objectives and environment
- Indian Accounting Standards (ICAI)
- US GAAP
- IFRS
- harmonization of accounting practices
- Activity-based costing
- Assigns overheads by activities that drive cost
- Target costing
- Target price − desired profit = allowable cost
- Kaizen costing
- Continuous small cost cuts during production
- Life cycle costing
- All costs from design to disposal
- Transfer pricing
- Price for goods traded between divisions
Study guide
You study contemporary topics: price-level, human resource, target, kaizen, activity-based and life cycle costing, transfer pricing, financial reporting, Ind AS, US GAAP, IFRS and harmonisation. Summarise two contemporary costing methods and where they are used.
Why Accounting for Management and Reporting Matters
Non-finance managers must read financial statements and understand costs to make sound decisions. This paper is the base for finance, operations and strategy courses.
How to Prepare for Accounting for Management and Reporting
- Practise ratio analysis on real annual reports.
- Solve CVP and variance problems daily.
- Learn the main accounting standards and what they cover.
Accounting for Management and Reporting: Frequently Asked Questions
What is ABC costing?
Activity-based costing assigns overhead costs to products based on the activities that drive those costs, giving more accurate product costs.