Gian Jyoti Institute of Management and

Technology, Mohali

ASSIGNMENT NO- 2

Academic Session January-May 202

 Name - Isha Rani

 Class - BBA-3
 Roll no - 1922768
 Subject code - BBA 303-18
 Subject Name - Cost and Management Accounting
Q1.
(1) Financial A/c & Management A/c
(2) Management A/c & Cost A/c
(3) Financial A/c & Cost A/c

Ans: (1) FINANCIAL ACCOUNTING AND MANAGEMENT

ACCOUNTING

Basis Management Accounting Financial accounting

Information Internal use. Eg. Managers, External use . eg.
mainly Employees Shareholders , creditors ,
produced for lendor, banks , Govt.
Purpose of To aid planning, controlling and To record the financial
information decision making performance in a period
and a financial position at
the end of the period.
Legal None Limited companies must
requirements produce financial
accounts .
Formats Management decide on the Format and content of
information the require and the financial accounts
most useful way of presenting it. intending to give a true and
fair view.
Nature of Financial, Non- Financial Mostly Financial
Information
Time period Historical and forward looking. Mainly an historical
record.
(2) MANAGEMENT AND COST ACCOUNTING
Basis Cost Accounting
Scope Limited to providing cost
information for managerial uses.
Emphasis Mainly on cost ascertainment and
cost control to ensure maximum
profit.
Techniques Standard and variance analysis,
employed marginal costing and cost volume
profit analysis, budgetary control,
uniform costing etc.
Evolution Its evolution is mainly due to the
limitations of financial
accounting.
Statutory Maintenance of cost records has
requirement been made compulsory in selected
industries as notified by the
government from time to time.
Installation Cost management can be installed
without management accounting
(4) FINANCIAL AND COST ACCOUNTING
Management Accounting
Broader scope because it
provides all types of
information
Mainly on planning,
controlling and decision
making to maximize profit.
All the techniques of cost
accounting but in addition
it also uses ratio analysis,
fund flow statement,
statistical analysis,
operation research etc.,
which help management in
tasks.
Its evolution is due to the
limitations of cost
accounting.
It is purely voluntary and
its depends upon the utility
of management.
Management accounting
cannot be installed without
proper system of cost
accounting
Basis Financial Accounting
Objective It provides information about
financial performance and
financial position of business
Nature It classifies records , presents and
interprets transactions in term of
money
Recording of It records historical data.
data
Users of External users like shareholders,
information creditors, financial analysts,
government and its agencies, etc.
Analysis of It shows profits/loss of the
cost and organization.
profits
Time period They are prepared for a definite
period, usually a year.
Presentation A set format is used for presenting
of information financial information.
Cost accounting
It provides information of
ascertainment of costs to
control costs and for
decisions making for the
costs.
It classifies, records,
presents and interprets in a
significant manner
material, labor and
overhead coasts
It records and presents
estimated, budgeted data. It
makes use of both
historical coasts and
predetermined costs
Used by internal
management at different
levels.
It provides details of costs
and profit of each product,
process, job, etc.
They are prepared as and
when required.
There are no set formats
for presenting cost
information’s.
Q2. Discuss the scope of management A/C & Cost A/C giving suitable example
from Indian companies perspective.
Ans: MANAGEMENT A/C
Management accounting is the presentation of accounting information such a
way as to assist management in the creation of policy and the day to day operation
of an undertaking. Thus, it relates to the use of accounting data collected with the
help of financial accounting and cost accounting for the purpose of policy
formulation, planning, control and decision-making by management .
SCOPE OF MANAGEMENT ACCOUNTING
The scope of management accounting is very wide and broad-based. It includes all
information which is provided to the management for financial analysis and
interpretation of the business operation.
(1)Financial Accounting; It tough provides historical information but is very
useful for future planning and financial forecasting. Designing of a proper
financial accounting system is must for obtaining full control and co-ordination of
operations of the business.
(2) Cost Accounting; It provides various techniques of costing, standard costing,
differential and opportunity cost analysis, etc., which play a useful role in the
operation and control of business undertaking.
(3) Budgeting and forecasting; Forecasting on the various aspects of the business
is necessary for budgeting. Budgetary control controls the activities of the business
through the operations of budget by comparing the actual with the budget figures,
finding out the deviations, analyzing the deviations in order to pinpoint the
responsibility and take remedial action so that adverse things may not happen in
future.
(4) Cost and controls procedure; These procedures are integral part of the
management accounting process and includes inventory control, budgetary control
and variance analysis, etc.
(5) Reporting; The management accountant is required to submit reports to the
management on the various aspects of the undertaking. While reporting he may use
statistical tools for presentation of information as graphs, charts, pictorial
presentation, index numbers and other devices in order to make the information
more impressive and intelligent.
(6) Methods and procedures; It includes in its study all those methods and
procedures which help the concern to use its resources in the most efficient and
economical manner. It undertakes special cost studies and estimations and reports
on cost volume profit relationship under changing circumstances.
(7) Tax accounting; It is an integral part of management accounting and includes
preparation of income statement, determination of taxable income and filling up
the return of income etc.
(8) Internal financial control; Management accounting includes the internal
control methods like internal audit, efficient office management, etc.

COST A/C
Cost accounting is the application of costing and cost accounting principles,
methods and techniques to science, art and practice of cost control and the
ascertainment of profitability. It includes the presentation of information derived
there from for purposes of managerial decisions-making. Thus, cost accountancy is
the science, art and practice of a cost accounting.
SCOPE OF COST ACCOUNTING
(1) Cost ascertainment: It deals with the collection and analysis of expenses,
the measurement of production of the different stages of manufacture and
the linking up of production with the expenses. In fact, the varying
procedures for the collection of expenses give rise to the different system of
costing.
(2) Cost control: It is the guidance and regulation by executive action of the
costs of operating an undertaking. It aims at guiding the actual performance
towards the line of targets.
(3) Cost audit: It the verification of the correctness of cost accounting plan. Its
purpose is not only to insure that cost accounts and other records are
arithmetically correct but also to see that the principles and rules have been
applied correctly.
(4) Budgetary control: It is the establishment of budgets relating to the
responsibilities of executives to the requirements of a policy and the
continues comparison of actual with budgeted results.