Contents

1.

Cost Accounting

18

1.1

Introduction.............................................................................................1-1

1.2

Meaning of Management Accounting.....................................................1-2

1.3

Definitions of Management Accounting..................................................1-2

1.4

Objectives of Management Accounting..................................................1-3

1.5

Need of Management Accounting..........................................................1-5

1.6

Evolution of Management Accounting....................................................1-6

1.7

Scope of Management Accounting........................................................1-6

1.8

Nature of Management Accounting........................................................1-7

1.9

Essentials of Management Accounting..................................................1-8

1.10 Functions of Management Accounting...................................................1-9

1.11 Tools and Techniques of Management Accounting.............................1-11
1.12 Advantages of Management Accounting.............................................1-12
1.13 Limitations/ Disadvantages..................................................................1-13
1.14 Distinction Between MA and FA...........................................................1-15
1.15 Distinction Between MA and CA..........................................................1-16

2.

Analysis and Interpretation of Financial Statement

42

2.1

Introduction.............................................................................................2-1

2.2

Ratio.......................................................................................................2-1

2.3

Analysis..................................................................................................2-2

2.4

Ratio Analysis.........................................................................................2-2

2.5

Nature of Ratio Analysis.........................................................................2-2

2.6

Objectives of Ratio Analysis...................................................................2-2

2.7

Uses or Utility.........................................................................................2-2

Management Accounting

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2.8

Limitations of Ratio Analysis..................................................................2-3

2.9

Types of Ratio........................................................................................2-4

2.10 Some Important Terms..........................................................................2-5

2.11 Chart Showing Various Ratios, Formula and ... ....................................2-7
2.12 Important Ratios from Point of View of ... ...........................................2-11
2.13 How to Remember Formulas of Ratios................................................2-12
Solved Problems............................................................................................2-24

3.

Fund Flow and Cash Flow Statement

42

3.1

Fund.......................................................................................................3-1

3.2

Flow of Fund...........................................................................................3-2

3.3

Fund Flow Statement.............................................................................3-2

Illustration.........................................................................................................3-9
4.

Working Capital

16

4.1

Introduction.............................................................................................4-1

4.2

Types of Working Capital.......................................................................4-2

4.3

Factors Affecting Working Capital..........................................................4-3

4.4

Financing of Working Capital Requirements..........................................4-5

4.5

Working Capital Cycle............................................................................4-7

4.6

Estimating Working Capital Requirements.............................................4-8

Illustrations.....................................................................................................4-10

5.

Marginal Costing

28

5.1

Introduction.............................................................................................5-1

5.2

Meaning..................................................................................................5-2

5.3

Objectives of Marginal Costing..............................................................5-2

5.4

Advantage of Marginal Costing..............................................................5-3

Management Accounting

II

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5.5 Disadvantages / Demerits / Limitations of Marginal Costing..................5-3

5.6 The Break Even Point............................................................................5-4
Illustration.........................................................................................................5-6
Illustration.........................................................................................................5-9
Illustration.......................................................................................................5-10
Formulae at a Glance....................................................................................5-13
Illustrations.....................................................................................................5-15

6.

Budget and Budgetary Control

34

6.1

Introduction.............................................................................................6-1

6.2

Meaning..................................................................................................6-1

6.3

Forecast vs Budget................................................................................6-2

6.4

Requirement of a Sound Budgeting System..........................................6-2

6.5

Objective of Budgeting...........................................................................6-3

6.6

Advantages of Budgeting.......................................................................6-3

6.7

Problems / Limitations of Budgeting.......................................................6-4

6.8

Budgeting Process.................................................................................6-4

6.9

Types of Budgets...................................................................................6-5

Illustrations.......................................................................................................6-9

Solved Question Papers

Management Accounting

III

1195A