ACCOUNTING FOR

DECISION-MAKERS
CMBA4 – AUG’2014
 BALANCE SHEET &
INCOME STATEMENTS
• Financial Accounting & Management Accounting
• Concepts / Conventions / Principles :
1. GCC; 1a) Cash v Accrual; 1b) Accounting period;
2. Historical cost; 2a) Materiality; 2b) Monetary;
3. Relevance; 3a)Consistency; 3b)Comparability
• Limitations of Financial Statements
• Different Users & their needs
 MANAGEMENT & FINANCIAL ACTG

MANAGEMENT FINANCIAL
ACCOUNTING ACCOUNTING
NATURE OF REPORTS Tend to be for specific Tend to be for general
PRODUCED purpose purpose
LEVEL OF DETAIL Often very detailed Usually Broad overview
REGULATIONS Unregulated Usually subject to
Accounting regulations
REPORTING INTERVAL As required by Managers Usually annual or bi-
annual
TIME HORIZON Often on projected future Almost always historical
& past information
RANGE & QUALITY OF Tend to contain Financial Focus on financial info,
INFORMATION & non-financial info + info great emphasis on
that cannot be verified objective , verifiable
evidence
 ACTG CONVENTIONS etc.
• ACCOUNTING CONVENTIONS:
1. Business Entity
2. Historic Cost
3. Prudence
4. GCC
5. Dual Aspect
• FORMS OF BUSINESS OWNERSHIP
• COST,VALUE & ACTG INFO
 BALANCE SHEET &
INCOME STATEMENTS
• P/L & B/S simplified – types of Capital
• Double Entry System
• Illustration on P/L , B/S & interpretation
thereon.
• Gross Profit, Net Profit & Operating Profit
• Sources & Application of Funds
• Ratios
 TYPES OF CAPITAL
• AUTHORIZED: Amt. of Capital that a Coy
can potentially issue as per its MOA
• ISSUED: Amt. offered by the Coy to its
Investors
• SUBSCRIBED: Part of Issued Capital which
has been subscribed to by the Investors
• PAID-UP: Actual amt. paid up
 FINANCIAL DATA
• Cash Flow & Fund Flow Statement
• Broad categorization of Ratios
• Limitations of Ratios
• Dividends
• Schedule – VI requirements
• Types of Issue of Shares
• Business transacted in different Coy
meetings
MARGINAL COSTING & BREAKEVEN
ANALYSIS
• What is Marginal Costing?
• Why & where is Marginal Costing used?
• Contribution, BEP & MS
• Difficulties of Break even Analysis in a
multi product Business
• Qualitative factors generally ignored in
Marginal Costing