Accounting and Auditing - I Management Accounting - I Notes | B.Com. (Accountancy) Semester 3 | Mumbai University | munotes

Contents

Module I Introduction to Management Accounting

1. What Management Accounting Is 1
2. The Scope of Management Accounting 3
3. The Functions of Management Accounting 5
4. The Decision Making Process 7
5. Financial Accounting Compared with Management Accounting 9
6. What Analysis and Interpretation Mean 11
7. The Vertical Form of the Balance Sheet 13
8. The Vertical Form of the Revenue Statement 16
9. How the Two Statements Relate to Each Other 19
10. The Three Tools of Analysis, in Outline 22
11. Practice Questions: Introduction and the Vertical Form 24

Module II Tools of analysis of Financial Statements

1. Why Financial Statements Are Analysed 28
2. The Advantages and the Limitations of Analysis 31
3. Trend Analysis: the Method 33
4. Choosing the Base Year 36
5. Trend Analysis, Worked 39
6. The Trend Balance Sheet 41
7. The Comparative Income Statement 44
8. The Comparative Balance Sheet 48
9. The Common Size Income Statement 51
10. The Common Size Balance Sheet 54
11. Which Tool Answers Which Question 57
12. Reading a Real Annual Report 60
13. Practice Questions: Tools of Analysis 63

Module III Ratio Analysis and Interpretation

1. What a Ratio Is, and How Ratios Are Classified 67
2. The Advantages and the Limitations of Ratio Analysis 70
3. The Du Pont Chart 72
4. Current Ratio and Liquid Ratio 75
5. Stock Working Capital Ratio 78
6. Proprietary Ratio 80
7. Debt Equity Ratio and Capital Gearing Ratio 82
8. Gross Profit Ratio 85
9. Expenses Ratio and Operating Ratio 88
10. Net Profit Ratio and Net Operating Profit Ratio 90
11. Stock Turnover Ratio 92
12. Return on Capital Employed 94
13. Return on Proprietor's Fund and Return on Equity Capital 97
14. Dividend Payout Ratio 100
15. Debt Service Ratio 103
16. Debtors Turnover and Creditors Turnover 105
17. A Complete Ratio Analysis, Worked 108
18. Practice Questions: Ratio Analysis and Du Pont Analysis 112

Module IV Cash Flow Analysis (AS 3)

1. What a Cash Flow Statement Is 117
2. Objectives and Significance of the Cash Flow Statement 120
3. Advantages and Limitations of the Cash Flow Statement 123
4. Cash and Cash Equivalents 125
5. Scope and Applicability of AS 3 128
6. Classification of Cash Flows 131
7. Operating Activities 134
8. Investing and Financing Activities 137
9. Interest, Dividends and Taxes on Income 140
10. Foreign Currency Cash Flows, Extraordinary Items and Non-cash Transactions 143
11. Acquisitions and Disposals, and the Other Disclosures 146
12. Reporting on a Net Basis, and the Financial Enterprise 149
13. The Indirect Method, Step by Step 152
14. A Complete Cash Flow Statement, Worked 156
15. Practice Questions: Cash Flow Analysis 159