MANAGEMENT ACCOUNTING /

MANAGEMENT & COST ACCOUNTING

(MRC 1413/ MRB 1022/ MRC 1023)

INTRODUCTION TO ACCOUNTING
Accounting
 defined as the art of recording, classifying and summarizing of
business transactions and business events in monetary terms and
interpreting the results (in the form of the information).

 Recording – transactions first recorded

 Classifying – sorting out: meaningful categories and classifications
 Summarising – accounting data are summarized periodically
 Interpreting – financial data are analysed and used to assist in more
effective decision-making
Classification of accounting
FINANCIAL ACCT MANAGEMENT ACCT COST ACCT

• Provision of information • Measures and reports • Provides information for

to external parties financial and management accounting
• Based on accounting nonfinancial information & financial accounting
standards that help managers • External Use
make decision • Profit determination
• Focuses on internal • Stock/Inventory
reporting – use MA Valuation
information to choose, • Internal Use
communicate, and
implement strategy • Planning and control
• Decision making
Why we need accounting?
Managers, investors (external) and management (internal) want to know:

Financial
Performance position
What did an accountant do?

Accounting cycle
1. 2. Post to 3. Adjust 4. Close 5. Prepare
Journalize accounts accounts accounts financial
transaction statements
Financial statements
Income • Measures the performance of the company.

Statement • Report the revenues and expenses.

Balance • Also known as statement of financial position/ condition.

• the financial status of the company at a point in time.
sheet • Net worth of the company.

Example Statement • A summary of cash receipts and cash payments.

• Liquidity

of cash flow • Consists of 3 sections: (1) operating activities, (2) investing

activities and (3) financing activities.