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MANAGEMENTMANAGEMENTACCOUNTINGACCOUNTING

MANAGEMENTMANAGEMENTACCOUNTINGACCOUNTING

MANAGEMENT + ACCOUNTINGMANAGEMENT + ACCOUNTING

BY NAMITA NARULA

1ST SEM MBA

MNIT

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MANAGEMENT It refers to the art of planning,organising

& directing the human efforts in accomplishing thedesired objective

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ACCOUNTING It is the process of recording , classifying &

summarizing the monitory effects of businesstransactions & events so that the concern party

may know the results.

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MANAGEMENT

ACCOUNTING It denotes every technique which may be useful

to management in discharging its functions likePOSDCORB

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ACCOUNTING PRINCIPLESACCOUNTING CONCEPTS+

ACCOUNTING CONVENTIONS

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ACCOUNTING

CONCEPTS Cost Full disclosure

Business entity

Consistency

Matching

Conservatism

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CONTD Materiality Business entity

Continuity of business unit Unit of measurement

Objective evidence

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CONVENTIONS Consistency. Full disclosure.

Materiality.

Conservatism.

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Branches of Accounting Financial accounting Cost accounting

Managerial accounting

Tax accounting

Auditing

Accounting systems

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Overview of the AccountingProcess

Post to the

ledger

Source

documents

Record

transactions

Prepare a trial

balance

Transaction Analyze

Prepare financial

statements and

report

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TYPES OF ACCOUNT3 types

Personal Acccount

Real AccountNominal Account

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Personal Acccount

Debit the Receiver and Credit the Giver

Eg:-Name of the Person,Name of the Company,etc.

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Real Account

Debit what comes in and Credit what goes out

Eg:- Property a/cAsset a/c

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TYPESTangible/Touchable Capable of being perceived by the senses or the mind;

especially capable of being handled or touched or felt.

Eg:-Land

Intangible

There are assets which are like the organisations

Eg:-Goodwill.

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Nominal Account Debit Expenses & Loses and Credit Profit &

Gains

Eg:- RentSalary etc..

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Personal a/cStarted Business with a Capital of Rs. 1,00,000.

Capital a/c

Person

Personal a/ c

Cash a/c

Tangible

aspect/Asset

Real a/c

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Real a/cBought Furniture for cash Rs. 25,000

Furniture a/c

Tangibleaspect/Asset

Real a/c

Cash a/c

Tangibleaspect/Asset

Real a/c

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Nominal Accountdepriciation on Machinery

Depriciation a/c

loss

Nominal a/c

Machinery a/c

asset

Real a/c

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Journal Entries

A journal is a chronological listing of the firm's

transactions, including the amounts, accounts thatare affected, and in which direction the accountsare affected.

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Format of journal entriesDate Accounts Debit Creditmm/dd account to be debited

(acc 1)xxxx.xx

account to be credited(acc 2)

xxxx.xx

Mike Peddler opens a bicycle repair shop.(Rs7500) He leases shop space(Rs1000), purchases an initial inventory of bike parts(RS 500), and beginsoperations. Here are the general journal entries for the first month:

Date Account Names & Explanation Debit Credit

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Date Account Names & Explanation Debit Credit

9/1 Cash a/c To 7500

Capital a/c 7500

Owner contributes $7500 in cashto capitalize the business.

9/8 Bike Parts/purchases a/c To 2500

Payable a/c 2500

Purchased $2500 in bike partson account, payable in 30 days.

9/15 Rent a/c To 1000

Cash a/c 1000

Paid first month's shop rent of $1000.

9/17 Cash a/c To 400

Receivable a/c 700

Revenue a/c 1100

Repaired bikes for $1100; collected $400cash; billed customers for the balance.

9/18 Expenses a/c To 275

Bike Parts a/c 275

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Format of ledger entries There are two ledgeraccounts affected by theabove journal entry(Account 1 and Account 2).

Each of these accounts isrepresented by a T-account in the generalledger. To post the entryto the ledger, simply

transfer the informationto the T-accounts:

Account 1

mm/dd xxxx.xx

Bal. xxxx.xx

Account 2

mm/dd xxxx.xx

Bal. xxxx.xx