MODEL ANSWER TO PAPER ACCOUNTING FOR MGMT MBA

◦MODEL ANSWER TO PAPER ACCOUNTING FOR MGMT MBA

◦     ACCOUNTING FOR MGMT

◦     SECTION B ATTEMPT ANY TWO QUESTIONS( PREVIOUS PAPER 2017)

◦    Q. HOW FAR COST ACCOUNTING HAS CONTRIBUTED IN REMOVING THE DEFECTS OF FINANCIAL ACCOUNTING?

◦    DEFINE MARGINAL COSTING. IS IT POSSIBLE OR DESIRABLE AT TIMES TO REDUCE SELLING PRICE BELOW MARGINAL COST?

◦    EXPLAIN THE VARIOUS RATIOS WHICH ARE HELPFUL TO JUDGE THE LIQUIDITY POSITION OF THE FIRM?

◦    WRITE SHORT NOTE ON THE FOLLOWING:-

•                      LIFE CYCLE COSTING

•                      TARGET COSTING

◦     Q. HOW FAR COST ACCOUNTING HAS CONTRIBUTED IN REMOVING THE DEFECTS IN FINANCIAL ACCOUNTING.?

◦     ANSWER:-FINANCIAL ACCOUNTING IS PROMARILY CONCERNED WITH RECORD KEEPING AND ON THE BASIS OF WHICH PROFIT AND LOSS ACCOUNT IS PREPARED. IT PROVIDES THE INFORMATION ABOUT NET PROFITOR NET LOSS AND EXPLAIN THE FINANCIAL POSITION ON PARTICULAR DATE.

◦   COST ACCOUNTING IS A BRANCH OF ACCOUNTING AND HAS BEEN DEVELOPED DUE TO LIMITATIONS OF FINANCIAL ACCOUNTING.

◦     LIMITATIONS OF FINANCIAL ACCOUNTING

•                NO CLEAR IDEA OF OPERATING EFFICIENCY WHEN PRICING ARE RISING OR FALLING

•                FINANCIAL ACCOUNTING ONLY DISCLOSES ONLY THE NET RESULT OF THE COLLECTIVE ACTIVITIES OF THE BUSINESS AS WHOLE. NOT SHOW THE THE PROFIT OF EACH DEPARTMENT/JOB/PROCESS/CONTRACT

•                FINANCIAL ACCOUNTING COSTS ARE NOT AVIALBALE IN PRICE FIXATION

•                NO CLASSIFICATION OF EXPENSES

•                NO DATA FOR COMPARISON

•                NO CONTROL ON COST

◦     LIMITATIONS OF FINANCIAL ACCOUNTING

◦    NO CONTROL ON COST

◦    NO WELL DEVLOPED SYSTEM TO ASSESS THE PERFORMANCE

◦    MAINLY HISTORICAL

◦    NO ANALYSIS OF LOSSESS

◦    DOES NOT PROVIDE REQUISITE INFORMATION IN REPORTS

◦    WILL NOT BE PROVIDE ANSERS TO CERTAIN QUESTIONS

◦     NEED OF COST ACCOUNTING

◦     COST ACCOUNTING PROVIDE DETAILED INFORMATION ABOUT EVERY ELEMENT OF THE COST TO THE MGMT.

◦     THE INFORMATION SUPPLIED BY COST ACCOUNTING ACTS AS MGMT TOOL FOR DECISION MAKING :

•                 FOR THEIR ORGANIZATION

•                 OPTIMUM UTILIZATION OF SCARCE RESOURCES

•                 CONTRIBUTING PROFITABILITY BY CONTROLLING EXPENDITURE

•                 ALSO TO OVERCOME THE LIMITATION OF FINANCIAL ACCOUNTING

◦     MEANING OF COST ACCOUNTING

◦     COSTING IS A TECHNIQUE AND PROCESS OF ASCERTAINING COST

◦    WHELDON,”COST ACCOUNTING IS THE APPLICATION OF ACCOUNTING AND COSTING PRINCIPLES,METHODS AND TECHNIQUES IN THE ASCERTAINMENT OF COSTS AND ANALYSIS OF SAVING OR EXCESS COST INCURRED AS COMPARED WITH PREVIOUS EXPERIENCE OR WITH STANDARD.

◦    COST ACCOUNTING RELATES TO THE COLLECTION.CLASSIFICATION,ASCERTAINMENT OF COST AND ITS ACCOUNTING AND CONTROL RELATING TO THE VARIOUS ELEMENTS OF COST. IT ESTABLISHES THE BUDGETS AND STANDARD COST AND ACTUAL COST OF OPERATIONS,PROCESSES,DEPARTMENT OR PRODUCT AND THE ANALYSIS OF VARIANCE,PROFITABILITY AND SOCIAL USE OF FUNDS.

◦     NATURE OF COST ACCOUNTING

◦   COSTING ACCOUNTING AS SEPARATE DISCIPLINE

◦   COST ACCOUNTING IS AN ART

◦   COST ACCOUNTING IS SCIENCE

◦   COST ACCOUNTING AS PROFESSION

◦     OBJECTIVE OF COST ACCOUNTING

◦    TO ASCERTAIN COST : COLLECTION AND CLASSIFICATION OF COST

◦    TO CONTROL COST

◦    DETERMINATION OF SELLING PRICE

◦    TO PROVIDE INFORMATION FOR BUSINESS POLICY AND DECISION MAKING

◦    DETERMINATION OF COSTING PROFIT

◦    TO ASCERTAIN THE PROFITABILITY

◦     SCOPE OF COST ACCOUNTING

◦     COSTING: TECHNIQUE AND PROCESSES OF CALCULTING THE COST

◦     COST ACCOUNTING: RECORDING AND PREPARING STATISTICAL DATA TO ASCERTAIN THE COST AND CONTROL

◦     COST CONTROL

◦     COST REDUCTION

◦     COST AUDIT

◦     CONTRIBUTION OF COST ACCOUNTING

◦     HELPS IN PLANNING,DECSION MAKING AND CONTROLLING

◦    CLASSIFICATION AND SUBDIVISION OF COSTS:-FOR THE PURPOSE OF CONTROL

◦    CONTROL OF MATERIAL/LABOUR AND OOVERHEAD:- FOR CONTROLLING MATERIAL/LABOUR AND OVERHEAD

•                   AN EFFICENT CHECK ON STORES AND MATERIAL

•                   AN EFFICIENT CHECK ON LABOUR AND MACHINES

◦    BUSINESS POLICIES

◦    BUDGETING

◦     CONTRIBUTION OF COST ACCOUNTING

◦   STANDARD FOR MEASURING EFFICIENCY

◦   BEST USE OF LIMITED RESOURCES

◦   INSTRUMENT OF MGMT CONTROL

◦   COST AUDIT

◦   SPECIAL FACTORS

◦   PRICE DETERMINATION

◦     CONTRIBUTION OF COST ACCOUNTING

•                     PROFITABLE AND UNPROFITABLE ACTIVITIES ARE DISCLOSED

•                     PROVIDE INFORMATION UPON WHICH ESTIMATES AND TENDER ARE BASED

•                     GUIDE FUTURE PRODUCTION POLICIES

•                     IMPROVING PROFIT

•                     RELAIBLE DATA FOR COMPARING

•                     HELPFUL TO CONSUMERS/GOVT

•                     HELPFUL TO THE ECONOMY

•                     EFFICIENCY OF PUBLIC ENTERPRISES