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8/10/2019 Mgt Acc Lecture 1
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Lecture 1
Tahmina Ahmed
Lecturer
Department of Humanities
Bangladesh University of Engineering & Technology (BUET)
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Accounting is the process ofidentifying,
recording,
classifying andsummarizingfinancial transactions
--------toproducethe financial reports for theirultimate use.
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Branches of Accounting
Financial Accounting
Cost Accounting
Managerial Accounting
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Process of gathering, organizing, and
Communicating financial information
Financial
Statements
Accounting Information System
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Users of Accounting Information
Internal managers
Creditors:
SuppliersBankers
Day-to-day operating decisions
Long-range strategic decisions
ManagementAccounting
Financial Accounting
External Users
Government Authorities
Investors: Stockholders
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Comparison of Financial andManagerial Accounting
Financial Accounting Managerial Accounting1. Users External persons who Managers who plan for
make financial decisions and control an organization
2. Time focus Historical perspective Future emphasis
3. Verifiability Emphasis on Emphasis on relevance
versus relevance verifiability for planning and control
4. Precision versus Emphasis on Emphasis on
timeliness precision timeliness
5. Subject Primary focus is on Focuses on segments
the whole organization of an organization
6. GAAP Must follow GAAP Need not follow GAAP
and prescribed formats or any prescribed format
7. Requirement Mandatory for Not
external reports Mandatory
2-6
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Management Accounting Challenges
Shift from a manufacturing-based
to a service-based economy
Increased global competition
Advances in technology
Changes in business processes
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Business process reengineering:
Just-in-time (JIT) philosophy
Lean manufacturingComputer-integrated manufacturing
Advances in Technology
E-commerce
Enterprise resource planning (ERP)
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Management of COST
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Sacrificed resource to achieve a specificobjective.
In accounting, cost is defined as the cashamount (or the cash equivalent) given up for an
asset. Cost includes all costs necessary to get
an asset in place and ready for use.
Example: Inventory purchase price plus freight-
in.
Whats Cost?
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Whats Cost Accounting?
Cost accounting is concerned with COST. It
includes not only CALCULATION of cost
rather MANGEMENT of COST.
CALCULATION: determination of costs of
products or services by
- recording
-classifying
-summarizing costs
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MANAGEMENT
-Planning
-Controlling
-Furnishing of information to management for
decision making.
Whats Cost Accounting?
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Two-fold FunctionCost Accounting to Financial
Accounting
Calculation and reporting of
-Cost of goods sold and
-Finished goods, work in process, and rawmaterials inventory
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Cost Accounting to ManagementAccounting
-Budgeting-Make or buy decision, keep or replace decision
-Determination of selling price.
-Resource allocation
-Cost of defectives and defect rates,performance measurement etc.
Two-fold Function
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End of Lecture 1