Page 12 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 1: Introduction to Accounting

15. Budget serves as a tool for co-ordinating the various activities and to the extent the actuals Notes
compared to budget works as a tool of control.

1.4 Summary

Financial accounting recorded business transactions on double-entry basis and helped
ascertainment of profit or loss for the given period and valuation of stock of assets and

liabilities on a given date.
Management accounting is the accounting system for making decisions of the business
enterprise.
Cost accounting is related with the ascertainment of cost of the product in a period.
Human Resource Accounting means the accounting for human being as now in an
organization human being is treated as an asset like other physical assets. It is recorded in
the books like other assets.
Responsibility accounting is a special technique of management under which
accountability is established according to the responsibility delegated to the various levels
of management.
Management accounting is based on the past or yesteryear information of cost accounting
and financial accounting which influences the effectiveness of the entire management

accounting.
The cost accounting is very closely-related to fi nancial accounting.
Few authorities of accounting consider cost accounting to be the branch of fi nancial
accounting.

The fundamental principles of double entry system are applicable in fi nancial accounting
as well as cost accounting.

1.5 Keywords

Cost Accounting: This helps management to conduct performance appraisal and also facilitates
in formulating price policies.

Financial Accounting: Financial accounting is a traditional method of accounting that supplies
historical information about the firm during the past.

Human Resource Accounting: Human Resource Accounting means the accounting for human
being as now in an organization human being is treated as an asset like other physical assets. It is
recorded in the books like other assets.

Management Accounting: Management accounting provides necessary information to assist the
management in the creation of policy and in the day-to-day operations.
Responsibility Accounting: Responsibility accounting is a special technique of management
under which accountability is established according to the responsibility delegated to the various
levels of management.

1.6 Review Questions

1. Do you think management accounting is different from financial accounting? Discuss.
2. Elucidate the various functions of management accounting.
3. Write brief notes on the key branches of accounting.

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