book

Management Accounting

Name: Management Accounting
Author: Debarshi Bhattacharyya
ISBN: 9788131731789

by Debarshi Bhattacharyya

July 2010

Intermediate to advanced

808 pages

20h 39m

English

Pearson India

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Cover
Title page
Contents
Dedication
Preface
Chapter 1. Introduction to Management Accounting
1.1 Definition of Management Accounting1.2 Nature or Features of Management Accounting1.3 Scope of Management Accounting1.4 Objectives of Management Accounting1.5 Role or Functions of Management Accounting1.6 Utility of Management Accounting1.7 Limitations of Management Accounting1.8 Tools and Techniques of Management Accounting1.9 Requisites for Installation of Management Accounting System1.10 How Does Management Accounting Differ from the other Branches of Accounting1.10.1 Management Accounting and Financial Accounting1.10.2 Management Accounting and Cost AccountingChapter Review SummaryChapter Review QuizExercise
Chapter 2. Analysis and Interpretation of Financial Statements
2.1 Meaning of Financial Statements2.2 Characteristics of Financial Statements2.3 Anatomy/Components of Financial Statements2.3.1 Income Statement or Profit & Loss Account2.3.2 Balance Sheet2.3.3 Statement of Changes in Financial Position2.4 Relationship Between Income Statement and Balance Sheet2.5 Concept of Financial Statement Analysis2.6 Objectives of Financial Statement Analysis2.7 Requisites of Financial Statement Analysis2.8 Different Approaches to Financial Statement Analysis2.8.1 Traditional Approach to Financial Statement Analysis2.8.2 Modern Approach to Financial Statement Analysis2.9 Types of Financial Statement Analysis2.10 Techniques/Tools of Financial Statement Analysis2.11 Comparative Financial Statement Analysis2.11.1 Concept of Comparative Financial Statement Analysis2.11.2 Advantages of Comparative Financial Statement Analysis2.11.3 Disadvantages of Comparative Financial Statement Analysis2.12 Common-size Financial Statement Analysis2.12.1 Concept of Common-size Financial Statement Analysis2.12.2 Advantages of Common-size Statement2.12.3 Disadvantages of Common-size Statement2.12.4 Comparative Statement vs. Common-size Statement2.13 Trend Analysis2.13.1 Concept of Trend Analysis2.13.2 Steps in Computing Trend Values (or Percentages)2.13.3 Advantages of Trend Analysis2.13.4 Disadvantages of Trend Analysis2.14 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 3. Accounting Ratios for Financial Statement Analysis
3.1 Financial Statements3.2 What is a Ratio?3.3 What is an Accounting Ratio?3.4 What is Ratio Analysis?3.5 Steps in Ratio Analysis3.6 Role or Importance of Ratio Analysis3.7 Uses of Ratio Analysis3.8 Advantages of Ratio Analysis3.9 Limitations of Ratio Analysis3.10 Parties Interested in Ratio Analysis3.11 Different Kinds of Ratios or Classification of Ratios3.12 Standard or Ideal Ratio3.13 Computation of Proprietors’ Fund, Capital Employed, Working Capital3.14 Calculation and Interpretation of Various Ratios3.14.1 Balance Sheet Ratios (Ratios as ascertained from various items of the Balance Sheet)3.14.2 Revenue Statement Ratio (Ratios as ascertained from the various items of the Profit & Loss A/c)3.14.3 Mixed or Composite Ratio (Ratio ascertained taking some items from the Balance Sheet and some other items from the Profit & Loss A/c)3.15 Du Pont Analysis3.16 Ratios to be used in Determining Solvency, Performance, Managerial Efficiency etc. of an Enterprise3.17 Different Ratios at Glance3.18 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 4. Cash Flow Analysis
4.1 What is Cash?4.2 Difference Between Cash and Fund4.3 What is Cash Flow Statement?4.4 Why is Cash Flow Statement Prepared?4.5 Importance of Cash Flow Statement4.6 Uses of Cash Flow Statement4.7 Advantages of Cash Flow Statement4.8 Limitations of Cash Flow Statement4.9 Differences Between Cash Book and Cash Flow Statement4.10 Differences Between Cash Flow Statement and Fund Flow Statement4.11 Proforma of Cash Flow Statement Prepared under Traditional/Conventional Method4.12 Cash Flow Statement as Prescribed in AS-34.12.1 Cash Flows from Operating Activities4.12.2 Cash Flows from Investing Activities4.12.3 Cash Flows from Financing Activities4.13 Proforma of Cash Flow Statement as Prescribed in AS-34.13.1 Proforma of Cash Flow Statement under Direct Method [Paragraph (a) Page II – 910]4.13.2 Proforma of Cash Flow Statement under Indirect Method [Paragraph (b) Page II – 910]4.14 Fundamental Differences Between Cash Flow Statement as per AS-3 and Traditional Method4.15 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 5. Fund Flow Analysis
5.1 Meaning and Concept of Fund5.2 Generally Accepted Concept of Fund5.3 Meaning of Flow of Fund5.4 What is Fund Flow Statement?5.5 Importance or Purposes of Fund Flow Statement5.6 Limitations of Fund Flow Statement5.7 Proforma of Presentation of Fund Flow Statement5.8 Different Sources of Fund5.9 Different Applications of Fund5.10 What is Fund from Operation?5.11 Different Approaches of Computation of Fund from Operation5.11.1 Direct Approach of Computation of Fund from Operation5.11.2 Indirect Approach of Computation of Fund from Operation5.12 Is Depreciation a Source of Fund?5.13 Comparison between Fund Flow Statement, Income Statement and Balance Sheet5.14 Distinction between Fund Flow Statement and Cash Flow Statement5.15 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise

Chapter 6. Working Capital
6.1 Meaning and Concept of Working Capital6.2 Importance of Working Capital6.3 Need for Working Capital6.4 Different Concepts and Classification of Working Capital6.4.1 Classification of Working Capital on the Basis of Concept6.4.2 Classification of Working Capital on the Basis of Time6.5 Sources of Working Capital6.5.1 Sources of Permanent Working Capital6.5.2 Sources of Temporary Working Capital6.6 Determinants of Working Capital6.7 Components of Working Capital6.8 Positive and Negative Working Capital6.9 Working Capital or Operating Cycle6.10 Estimation or Forecasting of Working Capital6.11 Procedure for Estimation/Forecasting of Working Capital6.12 Valuation of Stock of Work-In-Progress (WIP)6.13 Different Approaches of Estimation/Forecasting of Working Capital6.14 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 7. Budget and Budgetary Control
7.1 Meaning of Budget7.2 Meaning of Budgeting7.3 Features of Budget7.4 Budgetary Control7.5 Objectives of Budgetary Control7.6 Advantages of Budgetary Control7.7 Limitations of Budgetary Control7.8 Comparison between Budget and Budgetary Control7.9 Comparison between Standard Costing and Budgetary Control7.10 Zero-Based Budgeting (ZBB) 4697.11 Classification or Types of Budget7.11.1 Classification on the Basis of Period7.11.2 Classification on the Basis of Flexibility of Production7.11.3 Classification on the Basis of Function or CoverageWorked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 8. Standard Costing and Variance Analysis
8.1 What is Standard Cost?8.2 What is Standard Costing?8.2.1 Features of Standard Costing8.3 Preliminary Steps for Establishing Standard Costing System8.4 Types of Standards8.5 Distinction between Standard Cost, Estimated Cost and Actual/Historical Cost8.6 Advantages of Standard Costing8.7 Limitations of Standard Costing8.8 Comparison between Standard Costing and Budgetary Control8.9 Analysis of Variance8.9.1 Direction of Variances8.9.2 Nature of Variances8.9.3 Purposes of Variance Analysis8.10 Classification of Variances8.10.1 Material Variances8.10.2 Labour Variances8.10.3 Variable Overhead Variances8.10.4 Fixed Overhead Variances8.10.5 Sales Value Variances8.10.6 Sales Margin (Profit) Variances8.11 Formulae of Various Variances at a Glance8.12 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 9. Absorption Costing and Variable Costing
9.1 Absorption Costing9.2 Features of Absorption Costing9.3 Advantages of Absorption Costing9.4 Limitations of Absorption Costing9.5 Variable Costing9.6 Features of Variable Costing9.7 Advantages of Variable Costing9.8 Limitations of Variable Costing9.9 Income Determination under Absorption Costing and Variable Costing9.9.1 Income Determination under Absorption Costing Technique9.9.2 Income Determination under Variable Costing Technique9.10 Distinction between Absorption Costing and Variable Costing9.11 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 10. Marginal Costing and Cost–Volume–Profit Analysis
10.1 Concept of Marginal Cost10.2 Definition of Marginal Costing10.3 Features of Marginal Costing10.4 Advantages of Marginal Costing10.5 Limitations of Marginal Costing10.6 Meaning of Cost–Volume–Profit (CVP) Analysis10.7 Features of CVP Analysis10.8 Objectives of CVP Analysis10.9 Assumptions Underlying CVP Analysis10.10 Classification of Cost Under CVP Analysis10.11 Elements of CVP Analysis10.12 Break-Even Analysis (BE Analysis)10.13 Break-Even Chart (BE Chart)10.13.1 Presentation of BE Chart10.14 Angle of Incidence10.15 Mathematical Representation of CVP Analysis10.16 Different Formulae of CVP Analysis at a Glance10.17 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 11. Decision Making
11.1 Concept of Decision Making11.2 Steps in Decision Making11.3 Cost Concepts in Decision Making11.4 Concept of Relevant Cost and Relevant Revenue11.5 Comparison of Differential Cost Analysis and Marginal Costing11.6 Concept of Key or Limiting Factor11.7 Different Situations of Decision Making11.7.1 Determination of Most Profitable Product/Sales Mix11.7.2 Accept or Reject Decision11.7.3 Make or Buy Decision11.7.4 Operate or Shut-Down Decision11.8 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 12. Capital Budgeting
12.1 Concept of Capital Budgeting12.2 Features of Capital Budgeting12.3 Importance of Capital Budgeting12.4 Types of Investments12.5 Types of Capital Budgeting Decisions12.6 Evaluation Criteria of Capital Budgeting Decisions12.7 Concept of Present Value (PV)12.8 Determination of PV Factor or Discounting Factor12.9 Concept of Discounted Cash Flow12.10 Capital Budgeting Techniques12.10.1 Non-discounted Techniques (Without Considering the Time Value of Money)12.10.2 Discounted Cash Flow Techniques (Time-Adjusted Techniques)12.11 Worked-out ProblemsChapter Review SummaryChapter Review QuizExercise
Chapter 13. Responsibility Accounting
13.1 Meaning and Concept of Responsibility Accounting13.2 Prerequisites of Responsibility Accounting13.3 Assumptions of Responsibility Accounting13.4 Advantages or Benefits or Purposes of Responsibility Accounting13.5 Limitations of Responsibility Accounting13.6 Responsibility Centre13.7 Types of Responsibility Centres13.7.1 Cost Centre13.7.2 Profit Centre13.7.3 Investment Centre13.8 Controllable and Non-controllable Costs13.9 Responsibility Reporting13.10 Types of Responsibility ReportsChapter Review SummaryChapter Review QuizExercise
Appendix
Copyright

Content preview from Management Accounting

12 Capital Budgeting

LEARNING OBJECTIVES

On completion of the study of the chapter, you should be able to understand:

What is Capital Budgeting?
Features and importance of Capital Budgeting.
Different types of investments.
Different types of Capital Budgeting decisions.
Evaluation criteria of Capital Budgeting decisions.
Concept and determination of present value and discounted cash flow.
Different Capital Budgeting techniques.

12.1 CONCEPT OF CAPITAL BUDGETING

Capital Budgeting is the technique of long-term planning and analysis of outflows and inflows of funds relating to some investment objectives. It is the planning of capital expenditure which provides return over a number of years. According to Charles T. Horngreen, ‘Capital Budgeting ...

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