MANAGERIAL ACCOUNTING

BDA

June 2019
MANAGERIAL ACCOUNTING

• Financial Accounting
• Introduction/basic concepts, standards and practices of financial
accounting
• Balance Sheet / Profit and loss
• Fixed Assets, Depreciation,Inventory
• Cash Flow Statement
• Accounting Equation and Mechanics
• Financial Statement Analysis

• Management Accounting
• Master Budget/Flexible Budget/Variance Analysis
• Marginal costing & CVP Analysis
• Activity Based Costing
• Decision Making

• Case Study Analysis and Discussion

MANAGERIAL ACCOUNTING
• Objective:
• To provide knowledge on the basic concepts of
financial accounting, financial statement
analysis and management/cost accounting

• Tentative Sessions schedule

o Introduction to financial accounting, Balance
sheet and P&L etc– 10 sessions
o Budgeting, Variance Analysis – 2 sessions

o Management Accounting- 7 sessions

o Case study – 1 session

MANAGERIAL ACCOUNTING
• Evaluation (tentative):
o Mid term Test : 30%
o Test/Quiz (s) : 40%

o End Term Exam : 30%

 Text:
 Financial Accounting for Management- by N
Ramachandran and Ram Kumar Kakani
Or
Accounting-by Robert N. Anthony, David F. Hawkins,
Kenneth A. Merchant
 Cost Accounting – A Managerial Emphasis by Horngren,
Datar and Foster
MANAGERIAL ACCOUNTING

• Introduction
 Balance Sheet as on 31st March 2018 and 31st March 2017
Tata Consultancy Services Mar-18 Mar-17
(Standalone) 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 191 197
Total Share Capital 191 197
Reserves and Surplus 75,675 77,825
Total Reserves and Surplus 75,675 77,825
Total Shareholders Funds 75,866 78,022
NON-CURRENT LIABILITIES
Long Term Borrowings 39 44
Deferred Tax Liabilities [Net] 424 314
Other Long Term Liabilities 643 638
Long Term Provisions 26 39
Total Non-Current Liabilities 1,132 1,035
CURRENT LIABILITIES
Short Term Borrowings 181 200
Trade Payables 4,775 4,190
Other Current Liabilities 8,931 6,245
Short Term Provisions 171 66
Total Current Liabilities 14,058 10,701
Total Capital And Liabilities 91,056 89,758

ASSETS
NON-CURRENT ASSETS
Tangible Assets 9,430 9,214
Intangible Assets 10 17
Capital Work-In-Progress 1,238 1,477
Fixed Assets 10,678 10,708
Non-Current Investments 2,186 2,201
Deferred Tax Assets [Net] 3,051 2,447
Long Term Loans And Advances 1,503 6
Other Non-Current Assets 5,416 5,954
Total Non-Current Assets 22,834 21,316
CURRENT ASSETS
Current Investments 35,073 40,729
Inventories 25 21
Trade Receivables 18,882 16,582
Cash And Cash Equivalents 3,487 1,316
Short Term Loans And Advances 2,793 2,704
OtherCurrentAssets 7,962 7,090
Total Current Assets 68,222 68,442
Total Assets 91,056 89,758
 Profit and Loss Statement
for the period 1st April`17 to 31st March `18 and 1st April `16 to 31st Mar`17
Tata Consultancy Services ------------------- in Rs. Cr. -------------------
(Standalone) Mar-18 Mar-17
INCOME
Revenue From Operations [Gross] 97,356 92,693
Less: Excise/Sevice Tax/Other Levies - -
Revenue From Operations [Net] 97,356 92,693
Total Operating Revenues 97,356 92,693
Other Income 5,803 4,568
Total Revenue 103,159 97,261
EXPENSES
Cost Of Materials Consumed 86 94
Operating And Direct Expenses 1,920 1,664
Changes In Inventories Of FG,WIP And Stock-In Trade - -
Employee Benefit Expenses 51,499 48,116
Finance Costs 30 16
Depreciation And Amortisation Expenses 1,647 1,575
Other Expenses 16,046 15,730
Total Expenses 71,228 67,195
43,160 42,795

Profit/Loss Before Exceptional, Extraordinary Items And Tax 31,931 30,066

Profit/Loss Before Tax 31,931 30,066

Current Tax 6,878 6,643

Deferred Tax (188) (230)

Total Tax Expenses 6,690 6,413

Profit/Loss After Tax And Before Extraordinary Items 25,241 23,653
Profit/Loss From Continuing Operations 25,241 23,653
Profit/Loss For The Period 25,241 23,653
43,160 42,795
BASICS OF ACCOUNTS
•Basic Financial Statements
 To answer the three basic questions:
• How much profit was generated by the business
over a particular period?
• What are the assets and liabilities of the business
at the end of a particular period?
• What were the sources and uses of cash over a
particular period?

 Financial Statements
• Profit & Loss Statement
• Balance Sheet
• Cash Flow Statement
BASICS OF ACCOUNTS
• Accounting is defined as the process of identifying,
measuring, recording and communicating the required
information relating to the economic events of an
organization to the interested users of such information
for efficient decision making.

• Key Terms:
 Organization
 Economic Events-external/internal
 Identification, Measurement, Recording and Communication
 Interested Users of Information-external/internal
 Efficient Decision Making
BASICS OF ACCOUNTS
• Organization
• Organization refers to a business enterprise, whether for profit
or not-for profit motive.
• It can be a single proprietor concern, partnership firm,
cooperative society, trust, company, local authority (municipal
corporation) or any other association of persons.

• Business organizations involves economic events.

• An economic event is known as an activity related to a
business organization which consists of transactions and
which are measurable in monetary terms.
• Example
• Internal Event
• External Event
BASICS OF ACCOUNTS
• Identification, Measurement, Recording and Communication
• Identification :
• Determining what transactions to record, i.e., to identity events which
are to be recorded.
• Observing activities and selecting those events that are of financial
character and relate to the organization.

• Measurement :
• Quantification (including estimates) of business transactions into
financial terms by using monetary unit, viz. rupees as a measuring unit.
• If an event cannot be quantified in monetary terms, it is not considered
for recording in financial accounts.

• Recording :
• Once the economic events are identified and measured in financial
terms, these are recorded in books of account in monetary terms and in
a chronological order.

• Communication :
• The information is regularly communicated through accounting reports.
• Reports can be daily, weekly, monthly, or quarterly, depending upon the
needs of the users.
BASICS OF ACCOUNTS
• Interested Users of Information

• Accounting is a means by which necessary financial

information about business enterprise is communicated.

• Also called the language of business.

• Many users need financial information in order to make

important decisions.

• Internal users

• External users
BASICS OF ACCOUNTS
 Accounting Information and Economic Decisions
 Decide when to invest, buy, hold or sell .

 Assess the accountability of management

 Assess the ability of the enterprise to pay and provide other

benefits to its employees

 Assess the security for amounts advanced to the enterprise

 Determine taxation dues

 Determine distributable profits and dividends

 Regulate and manage the activities of enterprises

ACCOUNTING CYCLE

Economic The Accounting

Events Process

Accounting
links Decision Makers
with economic activities
Actions and with the results of
(Decisions) their
decisions

Decision
Communicating
Makers
the Accounting
(Internal and
Information
External users)
BASICS OF ACCOUNTS
• Accounting Concepts

• Accounting concepts define the rules on the basis of which the

financial statements of a business entity are prepared.

• Concepts are perceived, assumed and accepted in accounting to

provide a unifying structure and internal logic to accounting
process

• Accounting concepts lay the foundation on the basis of which

the accounting principles are formulated.

• Formed over time and established through agreement or broad

consensus.
BASICS OF ACCOUNTS
• Accounting Concepts
• Business Entity
• Property Rights of entity
• Monetary Expression
• Accrual
• Matching Concepts
• Going Concern
• Realization Concept
• Consistency (Also called as Accounting Conventions)
• Conservatism (Also called as Accounting Conventions)
• Cost Concept
• Data Dependability through internal control.
• Objectivity
• Materiality (Also called as Accounting Conventions)
• Timeliness with periodic reporting
• Full Disclosure (Also called as Accounting Conventions)
• Dual Aspect Concept