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Management Accounting

Book Description

Management Accounting is a comprehensive textbook with a focus on the essentials, designed to help students understand the basic concepts and practice underlying management accounting in a systematic manner. A balanced approach between theoretical and numerical aspects of the subject has been adopted to ensure ease and clarity in learning. The lucid writing, contents and organization of the chapters make the book eminently suitable for the undergraduate students of various Indian Universities.

Table of Contents

  1. Cover
  2. Title page
  3. Contents
  4. Dedication
  5. Preface
  6. Chapter 1. Introduction to Management Accounting
    1. 1.1 Definition of Management Accounting
    2. 1.2 Nature or Features of Management Accounting
    3. 1.3 Scope of Management Accounting
    4. 1.4 Objectives of Management Accounting
    5. 1.5 Role or Functions of Management Accounting
    6. 1.6 Utility of Management Accounting
    7. 1.7 Limitations of Management Accounting
    8. 1.8 Tools and Techniques of Management Accounting
    9. 1.9 Requisites for Installation of Management Accounting System
    10. 1.10 How Does Management Accounting Differ from the other Branches of Accounting
      1. 1.10.1 Management Accounting and Financial Accounting
      2. 1.10.2 Management Accounting and Cost Accounting
    11. Chapter Review Summary
    12. Chapter Review Quiz
    13. Exercise
  7. Chapter 2. Analysis and Interpretation of Financial Statements
    1. 2.1 Meaning of Financial Statements
    2. 2.2 Characteristics of Financial Statements
    3. 2.3 Anatomy/Components of Financial Statements
      1. 2.3.1 Income Statement or Profit & Loss Account
      2. 2.3.2 Balance Sheet
      3. 2.3.3 Statement of Changes in Financial Position
    4. 2.4 Relationship Between Income Statement and Balance Sheet
    5. 2.5 Concept of Financial Statement Analysis
    6. 2.6 Objectives of Financial Statement Analysis
    7. 2.7 Requisites of Financial Statement Analysis
    8. 2.8 Different Approaches to Financial Statement Analysis
      1. 2.8.1 Traditional Approach to Financial Statement Analysis
      2. 2.8.2 Modern Approach to Financial Statement Analysis
    9. 2.9 Types of Financial Statement Analysis
    10. 2.10 Techniques/Tools of Financial Statement Analysis
    11. 2.11 Comparative Financial Statement Analysis
      1. 2.11.1 Concept of Comparative Financial Statement Analysis
      2. 2.11.2 Advantages of Comparative Financial Statement Analysis
      3. 2.11.3 Disadvantages of Comparative Financial Statement Analysis
    12. 2.12 Common-size Financial Statement Analysis
      1. 2.12.1 Concept of Common-size Financial Statement Analysis
      2. 2.12.2 Advantages of Common-size Statement
      3. 2.12.3 Disadvantages of Common-size Statement
      4. 2.12.4 Comparative Statement vs. Common-size Statement
    13. 2.13 Trend Analysis
      1. 2.13.1 Concept of Trend Analysis
      2. 2.13.2 Steps in Computing Trend Values (or Percentages)
      3. 2.13.3 Advantages of Trend Analysis
      4. 2.13.4 Disadvantages of Trend Analysis
    14. 2.14 Worked-out Problems
    15. Chapter Review Summary
    16. Chapter Review Quiz
    17. Exercise
  8. Chapter 3. Accounting Ratios for Financial Statement Analysis
    1. 3.1 Financial Statements
    2. 3.2 What is a Ratio?
    3. 3.3 What is an Accounting Ratio?
    4. 3.4 What is Ratio Analysis?
    5. 3.5 Steps in Ratio Analysis
    6. 3.6 Role or Importance of Ratio Analysis
    7. 3.7 Uses of Ratio Analysis
    8. 3.8 Advantages of Ratio Analysis
    9. 3.9 Limitations of Ratio Analysis
    10. 3.10 Parties Interested in Ratio Analysis
    11. 3.11 Different Kinds of Ratios or Classification of Ratios
    12. 3.12 Standard or Ideal Ratio
    13. 3.13 Computation of Proprietors’ Fund, Capital Employed, Working Capital
    14. 3.14 Calculation and Interpretation of Various Ratios
      1. 3.14.1 Balance Sheet Ratios (Ratios as ascertained from various items of the Balance Sheet)
      2. 3.14.2 Revenue Statement Ratio (Ratios as ascertained from the various items of the Profit & Loss A/c)
      3. 3.14.3 Mixed or Composite Ratio (Ratio ascertained taking some items from the Balance Sheet and some other items from the Profit & Loss A/c)
    15. 3.15 Du Pont Analysis
    16. 3.16 Ratios to be used in Determining Solvency, Performance, Managerial Efficiency etc. of an Enterprise
    17. 3.17 Different Ratios at Glance
    18. 3.18 Worked-out Problems
    19. Chapter Review Summary
    20. Chapter Review Quiz
    21. Exercise
  9. Chapter 4. Cash Flow Analysis
    1. 4.1 What is Cash?
    2. 4.2 Difference Between Cash and Fund
    3. 4.3 What is Cash Flow Statement?
    4. 4.4 Why is Cash Flow Statement Prepared?
    5. 4.5 Importance of Cash Flow Statement
    6. 4.6 Uses of Cash Flow Statement
    7. 4.7 Advantages of Cash Flow Statement
    8. 4.8 Limitations of Cash Flow Statement
    9. 4.9 Differences Between Cash Book and Cash Flow Statement
    10. 4.10 Differences Between Cash Flow Statement and Fund Flow Statement
    11. 4.11 Proforma of Cash Flow Statement Prepared under Traditional/Conventional Method
    12. 4.12 Cash Flow Statement as Prescribed in AS-3
      1. 4.12.1 Cash Flows from Operating Activities
      2. 4.12.2 Cash Flows from Investing Activities
      3. 4.12.3 Cash Flows from Financing Activities
    13. 4.13 Proforma of Cash Flow Statement as Prescribed in AS-3
      1. 4.13.1 Proforma of Cash Flow Statement under Direct Method [Paragraph (a) Page II – 910]
      2. 4.13.2 Proforma of Cash Flow Statement under Indirect Method [Paragraph (b) Page II – 910]
    14. 4.14 Fundamental Differences Between Cash Flow Statement as per AS-3 and Traditional Method
    15. 4.15 Worked-out Problems
    16. Chapter Review Summary
    17. Chapter Review Quiz
    18. Exercise
  10. Chapter 5. Fund Flow Analysis
    1. 5.1 Meaning and Concept of Fund
    2. 5.2 Generally Accepted Concept of Fund
    3. 5.3 Meaning of Flow of Fund
    4. 5.4 What is Fund Flow Statement?
    5. 5.5 Importance or Purposes of Fund Flow Statement
    6. 5.6 Limitations of Fund Flow Statement
    7. 5.7 Proforma of Presentation of Fund Flow Statement
    8. 5.8 Different Sources of Fund
    9. 5.9 Different Applications of Fund
    10. 5.10 What is Fund from Operation?
    11. 5.11 Different Approaches of Computation of Fund from Operation
      1. 5.11.1 Direct Approach of Computation of Fund from Operation
      2. 5.11.2 Indirect Approach of Computation of Fund from Operation
    12. 5.12 Is Depreciation a Source of Fund?
    13. 5.13 Comparison between Fund Flow Statement, Income Statement and Balance Sheet
    14. 5.14 Distinction between Fund Flow Statement and Cash Flow Statement
    15. 5.15 Worked-out Problems
    16. Chapter Review Summary
    17. Chapter Review Quiz
    18. Exercise
  11. Chapter 6. Working Capital
    1. 6.1 Meaning and Concept of Working Capital
    2. 6.2 Importance of Working Capital
    3. 6.3 Need for Working Capital
    4. 6.4 Different Concepts and Classification of Working Capital
      1. 6.4.1 Classification of Working Capital on the Basis of Concept
      2. 6.4.2 Classification of Working Capital on the Basis of Time
    5. 6.5 Sources of Working Capital
      1. 6.5.1 Sources of Permanent Working Capital
      2. 6.5.2 Sources of Temporary Working Capital
    6. 6.6 Determinants of Working Capital
    7. 6.7 Components of Working Capital
    8. 6.8 Positive and Negative Working Capital
    9. 6.9 Working Capital or Operating Cycle
    10. 6.10 Estimation or Forecasting of Working Capital
    11. 6.11 Procedure for Estimation/Forecasting of Working Capital
    12. 6.12 Valuation of Stock of Work-In-Progress (WIP)
    13. 6.13 Different Approaches of Estimation/Forecasting of Working Capital
    14. 6.14 Worked-out Problems
    15. Chapter Review Summary
    16. Chapter Review Quiz
    17. Exercise
  12. Chapter 7. Budget and Budgetary Control
    1. 7.1 Meaning of Budget
    2. 7.2 Meaning of Budgeting
    3. 7.3 Features of Budget
    4. 7.4 Budgetary Control
    5. 7.5 Objectives of Budgetary Control
    6. 7.6 Advantages of Budgetary Control
    7. 7.7 Limitations of Budgetary Control
    8. 7.8 Comparison between Budget and Budgetary Control
    9. 7.9 Comparison between Standard Costing and Budgetary Control
    10. 7.10 Zero-Based Budgeting (ZBB) 469
    11. 7.11 Classification or Types of Budget
      1. 7.11.1 Classification on the Basis of Period
      2. 7.11.2 Classification on the Basis of Flexibility of Production
      3. 7.11.3 Classification on the Basis of Function or Coverage
    12. Worked-out Problems
    13. Chapter Review Summary
    14. Chapter Review Quiz
    15. Exercise
  13. Chapter 8. Standard Costing and Variance Analysis
    1. 8.1 What is Standard Cost?
    2. 8.2 What is Standard Costing?
      1. 8.2.1 Features of Standard Costing
    3. 8.3 Preliminary Steps for Establishing Standard Costing System
    4. 8.4 Types of Standards
    5. 8.5 Distinction between Standard Cost, Estimated Cost and Actual/Historical Cost
    6. 8.6 Advantages of Standard Costing
    7. 8.7 Limitations of Standard Costing
    8. 8.8 Comparison between Standard Costing and Budgetary Control
    9. 8.9 Analysis of Variance
      1. 8.9.1 Direction of Variances
      2. 8.9.2 Nature of Variances
      3. 8.9.3 Purposes of Variance Analysis
    10. 8.10 Classification of Variances
      1. 8.10.1 Material Variances
      2. 8.10.2 Labour Variances
      3. 8.10.3 Variable Overhead Variances
      4. 8.10.4 Fixed Overhead Variances
      5. 8.10.5 Sales Value Variances
      6. 8.10.6 Sales Margin (Profit) Variances
    11. 8.11 Formulae of Various Variances at a Glance
    12. 8.12 Worked-out Problems
    13. Chapter Review Summary
    14. Chapter Review Quiz
    15. Exercise
  14. Chapter 9. Absorption Costing and Variable Costing
    1. 9.1 Absorption Costing
    2. 9.2 Features of Absorption Costing
    3. 9.3 Advantages of Absorption Costing
    4. 9.4 Limitations of Absorption Costing
    5. 9.5 Variable Costing
    6. 9.6 Features of Variable Costing
    7. 9.7 Advantages of Variable Costing
    8. 9.8 Limitations of Variable Costing
    9. 9.9 Income Determination under Absorption Costing and Variable Costing
      1. 9.9.1 Income Determination under Absorption Costing Technique
      2. 9.9.2 Income Determination under Variable Costing Technique
    10. 9.10 Distinction between Absorption Costing and Variable Costing
    11. 9.11 Worked-out Problems
    12. Chapter Review Summary
    13. Chapter Review Quiz
    14. Exercise
  15. Chapter 10. Marginal Costing and Cost–Volume–Profit Analysis
    1. 10.1 Concept of Marginal Cost
    2. 10.2 Definition of Marginal Costing
    3. 10.3 Features of Marginal Costing
    4. 10.4 Advantages of Marginal Costing
    5. 10.5 Limitations of Marginal Costing
    6. 10.6 Meaning of Cost–Volume–Profit (CVP) Analysis
    7. 10.7 Features of CVP Analysis
    8. 10.8 Objectives of CVP Analysis
    9. 10.9 Assumptions Underlying CVP Analysis
    10. 10.10 Classification of Cost Under CVP Analysis
    11. 10.11 Elements of CVP Analysis
    12. 10.12 Break-Even Analysis (BE Analysis)
    13. 10.13 Break-Even Chart (BE Chart)
      1. 10.13.1 Presentation of BE Chart
    14. 10.14 Angle of Incidence
    15. 10.15 Mathematical Representation of CVP Analysis
    16. 10.16 Different Formulae of CVP Analysis at a Glance
    17. 10.17 Worked-out Problems
    18. Chapter Review Summary
    19. Chapter Review Quiz
    20. Exercise
  16. Chapter 11. Decision Making
    1. 11.1 Concept of Decision Making
    2. 11.2 Steps in Decision Making
    3. 11.3 Cost Concepts in Decision Making
    4. 11.4 Concept of Relevant Cost and Relevant Revenue
    5. 11.5 Comparison of Differential Cost Analysis and Marginal Costing
    6. 11.6 Concept of Key or Limiting Factor
    7. 11.7 Different Situations of Decision Making
      1. 11.7.1 Determination of Most Profitable Product/Sales Mix
      2. 11.7.2 Accept or Reject Decision
      3. 11.7.3 Make or Buy Decision
      4. 11.7.4 Operate or Shut-Down Decision
    8. 11.8 Worked-out Problems
    9. Chapter Review Summary
    10. Chapter Review Quiz
    11. Exercise
  17. Chapter 12. Capital Budgeting
    1. 12.1 Concept of Capital Budgeting
    2. 12.2 Features of Capital Budgeting
    3. 12.3 Importance of Capital Budgeting
    4. 12.4 Types of Investments
    5. 12.5 Types of Capital Budgeting Decisions
    6. 12.6 Evaluation Criteria of Capital Budgeting Decisions
    7. 12.7 Concept of Present Value (PV)
    8. 12.8 Determination of PV Factor or Discounting Factor
    9. 12.9 Concept of Discounted Cash Flow
    10. 12.10 Capital Budgeting Techniques
      1. 12.10.1 Non-discounted Techniques (Without Considering the Time Value of Money)
      2. 12.10.2 Discounted Cash Flow Techniques (Time-Adjusted Techniques)
    11. 12.11 Worked-out Problems
    12. Chapter Review Summary
    13. Chapter Review Quiz
    14. Exercise
  18. Chapter 13. Responsibility Accounting
    1. 13.1 Meaning and Concept of Responsibility Accounting
    2. 13.2 Prerequisites of Responsibility Accounting
    3. 13.3 Assumptions of Responsibility Accounting
    4. 13.4 Advantages or Benefits or Purposes of Responsibility Accounting
    5. 13.5 Limitations of Responsibility Accounting
    6. 13.6 Responsibility Centre
    7. 13.7 Types of Responsibility Centres
      1. 13.7.1 Cost Centre
      2. 13.7.2 Profit Centre
      3. 13.7.3 Investment Centre
    8. 13.8 Controllable and Non-controllable Costs
    9. 13.9 Responsibility Reporting
    10. 13.10 Types of Responsibility Reports
    11. Chapter Review Summary
    12. Chapter Review Quiz
    13. Exercise
  19. Appendix
  20. Copyright