Introduction to Cost and Management Accounting

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Introduction to Cost and Management Accounting
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What is Introduction to Cost and Management
Accounting ?

• This module is not about
• Bookkeeping
• This module is about
• Accounting
• Finance
• for all types of organizations
• (public and private sector)

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What is Bookkeeping Accounting ?

• Bookkeeping
• recording the transactions of an
  organization
• Accounting
• analysis of the performance of an organization

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What is Bookkeeping ?

• You have 10.
• Your mother/father/aunt gives you 100 because
  today is your birthday.
• You go with your friends to celebrate your
  birthday.
• You have 15 left after the celebration.
• How much money did you spend?
• In businesses, all of this would be recorded !

Books would be kept of all your (financial)
activities !!
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What is Bookkeeping 2 ?

• the keeping of Accounts
• the keeping of accounting records
• Accounting records are kept in Books or
  Ledgers
• In businesses all transactions are recorded
• Book-keeping is simply keeping the records of
  business transactions

Records are kept of all the (financial) activities
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What is Bookkeeping 3 ?

• record important, useful information.
• the information must be recorded accurately
• it is routine
• It is recording
• It is accounting for business transactions
• Examples of transactions
• sale/purchase of goods/services
• every sale, etc., is shown in money

Book-keeping is often known as Double entry
Accounts are kept of all the (financial)
activities
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What is Accounting 1?

• Providing financial information in an
  organization
• objectively
• consistently
• professionally
• conservatively valued
• to enable management to perform three functions
• recording
• analysis
• control

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What is Accounting 2?

• Using financial information to analyse the
  performance of management of (and inside ) an
  organization
• objectively
• consistently
• professionally
• with reliable techniques for internal
  management control
• and comparing overall performance of the
  organisation
• with (for example) other organizations

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What is Accounting 3?

• Obtaining finance (capital) for management of an
  organization
• Sources of Funds
• Forecasting performance (managers/depts./organizat
  ion)
• Budgeting
• Checking actual performance against
  planned/forecasted performance (as above)
• Financial Management - Costing
• Auditing claims (claimed performance) of
  organizations
• etc.

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What is Bookkeeping and Accounting?

• Accounting is
• very business-like
• very professional
• You must do/be the same
• Keeping accounts
• keeps checks on customers and suppliers
• leads to preparation of overall, summary
  statements
• These Financial Statements are information to
  the business.

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What is Bookkeeping and Accounting?

• We cannot keep Accounting records
• without documents (proof of transactions)
• sales, purchases, banking (payment and receipts)
  documents
• these are source documents
• this documentary evidence
• tells/shows us the actual transaction
• shows what has happened
• Accounting records
• show the impact of these transactions on a
  business
• show what these transactions mean to a business

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Advantages of studying this subject

• To be well-prepared for future career development
• All managers need accounting
• Easier to find a job
• All organizations need accounting
• Closely related to daily life.

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Possible Future Career Development 1
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Possible Future Career Development 2
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Modules available in Accounting and Finance
Management Accounting
Principles of Accounts 2
Strategic Management Accounting
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Criteria for studying and succeeding in this
subject

• Diligent - hard work
• Sensitive to figures (not necessarily good at
  Maths.)
• Willing to learn
• Willing to think critically

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Any Questions ?
Powerpoint presentation adapted by M C Pratt, St
Martins College, from Principles of Accounts
(Career Talk) produced by the CNEC Christian
College, May 2000. Web page http//www.cneccc.edu
.hk/subjects/poa/resources/Principles20of20Accou
nts20(Career20Talk).ppt