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MANAGEMENTMANAGEMENTACCOUNTINGACCOUNTING
MANAGEMENTMANAGEMENTACCOUNTINGACCOUNTING
MANAGEMENT + ACCOUNTINGMANAGEMENT + ACCOUNTING
BY NAMITA NARULA
1ST SEM MBA
MNIT
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MANAGEMENT It refers to the art of planning,organising
& directing the human efforts in accomplishing thedesired objective
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ACCOUNTING It is the process of recording , classifying &
summarizing the monitory effects of businesstransactions & events so that the concern party
may know the results.
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MANAGEMENT
ACCOUNTING It denotes every technique which may be useful
to management in discharging its functions likePOSDCORB
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ACCOUNTING PRINCIPLESACCOUNTING CONCEPTS+
ACCOUNTING CONVENTIONS
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ACCOUNTING
CONCEPTS Cost Full disclosure
Business entity
Consistency
Matching
Conservatism
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CONTD Materiality Business entity
Continuity of business unit Unit of measurement
Objective evidence
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CONVENTIONS Consistency. Full disclosure.
Materiality.
Conservatism.
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Branches of Accounting Financial accounting Cost accounting
Managerial accounting
Tax accounting
Auditing
Accounting systems
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Overview of the AccountingProcess
Post to the
ledger
Source
documents
Record
transactions
Prepare a trial
balance
Transaction Analyze
Prepare financial
statements and
report
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TYPES OF ACCOUNT3 types
Personal Acccount
Real AccountNominal Account
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Personal Acccount
Debit the Receiver and Credit the Giver
Eg:-Name of the Person,Name of the Company,etc.
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Real Account
Debit what comes in and Credit what goes out
Eg:- Property a/cAsset a/c
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TYPESTangible/Touchable Capable of being perceived by the senses or the mind;
especially capable of being handled or touched or felt.
Eg:-Land
Intangible
There are assets which are like the organisations
Eg:-Goodwill.
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Nominal Account Debit Expenses & Loses and Credit Profit &
Gains
Eg:- RentSalary etc..
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Personal a/cStarted Business with a Capital of Rs. 1,00,000.
Capital a/c
Person
Personal a/ c
Cash a/c
Tangible
aspect/Asset
Real a/c
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Real a/cBought Furniture for cash Rs. 25,000
Furniture a/c
Tangibleaspect/Asset
Real a/c
Cash a/c
Tangibleaspect/Asset
Real a/c
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Nominal Accountdepriciation on Machinery
Depriciation a/c
loss
Nominal a/c
Machinery a/c
asset
Real a/c
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Journal Entries
A journal is a chronological listing of the firm's
transactions, including the amounts, accounts thatare affected, and in which direction the accountsare affected.
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Format of journal entriesDate Accounts Debit Creditmm/dd account to be debited
(acc 1)xxxx.xx
account to be credited(acc 2)
xxxx.xx
Mike Peddler opens a bicycle repair shop.(Rs7500) He leases shop space(Rs1000), purchases an initial inventory of bike parts(RS 500), and beginsoperations. Here are the general journal entries for the first month:
Date Account Names & Explanation Debit Credit
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Date Account Names & Explanation Debit Credit
9/1 Cash a/c To 7500
Capital a/c 7500
Owner contributes $7500 in cashto capitalize the business.
9/8 Bike Parts/purchases a/c To 2500
Payable a/c 2500
Purchased $2500 in bike partson account, payable in 30 days.
9/15 Rent a/c To 1000
Cash a/c 1000
Paid first month's shop rent of $1000.
9/17 Cash a/c To 400
Receivable a/c 700
Revenue a/c 1100
Repaired bikes for $1100; collected $400cash; billed customers for the balance.
9/18 Expenses a/c To 275
Bike Parts a/c 275
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Format of ledger entries There are two ledgeraccounts affected by theabove journal entry(Account 1 and Account 2).
Each of these accounts isrepresented by a T-account in the generalledger. To post the entryto the ledger, simply
transfer the informationto the T-accounts:
Account 1
mm/dd xxxx.xx
Bal. xxxx.xx
Account 2
mm/dd xxxx.xx
Bal. xxxx.xx