Management Accounting

Reading materials of Management Accounting, Management Accounting (MA)

Management Accounting (MA)

List of Short Notes of Management Accounting (MA):

What is an Operating Budget?

An operating budget is a combination of known expenses, expected future costs, and forecasted income over the course of a year. Operating budgets are completed in advance of the accounting period, which is why they require estimated expenses and revenues.
An operating budget is the annual budget of an activity stated in terms of Budget Classification Code, functional/subfunctional categories and cost accounts. It contains estimates of the total value of resources required for the performance of the operation including reimbursable work or services for others. It also includes estimates of workload in terms of total work units identified by cost accounts.
In the United States, businesses along with state and local governments divide their budgets into two types: the operating budget and capital budget. The operating budget is used to keep track of maintenance operations, salaries, and interest payments.

What is Cost of capital?

In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the required rate of return on a portfolio company's existing securities". It is used to evaluate new projects of a company. It is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.
The weighted average cost of capital is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm’s cost of capital. The meaning of Cost of capital, WACC, Cost of debt, Cost of equity, Cost of funds, and Cost of borrowing, defined, explained, and calculated with examples. A company's cost of capital is the cost of money the company uses to finance their operations and purchases of assets. Cost of capital is important because the company has to be vigilant and sure that their cost of capital is lower than their return on capital.

What is a Budget Deficit / Deficit Budget ?

A budget deficit is an indicator of financial health in which expenditures exceed revenue. The term budget deficit is most commonly used to refer to government spending rather than business or individual spending, but can be applied to all of these entities. When referring to accrued federal government deficits, the deficits are referred to as the national debt.
The amount by which a government, company, or individual's spending exceeds its income over a particular period of time. also called deficit or deficit spending. opposite of budget surplus. A budget deficit occurs when an individual, business or government budgets more spending than there is revenue available to pay for the spending, over a specific period of time. Debt is the aggregate value of deficits accumulated over time. We will be focusing on government deficits in this lesson.

What is Management Report?

Management reports show the worth of your business over a specified period of time. When running the reports you can view more detail about each of the values on the reports to see how they’re calculated. You can also choose to export these reports as CSV files which you can open with Excel, or produce a PDF which you can print or save. You will be able to dive deeper into the financial standing of your company through management reports which consist of: Profit and Loss by Class, Department, Team, Job, Realization Rate, Utilization Rate, Unlike financial reports, management accounting is not mandatory and is for internal use only. Your company doesn’t have to follow GAAP guidelines when producing the reports.
Instead of an overall evaluation of the company, management reporting is focused on segments of the business. By segmenting, you can get into the details and analyze the drivers of your business. An example would be analyzing how the Marketing Department is performing for a certain time period or how much profit one Sales Employee had a certain month.

What is common misconceptions?

This list of common misconceptions corrects erroneous beliefs that are currently widely held about notable topics. Each misconception and the corresponding facts have been discussed in published literature. Note that each entry is formatted as a correction; the misconceptions themselves are implied rather than stated. The best corrected facts include:
Twinkies don’t last forever; they have a shelf life of about 45 days.
An undercover cop is allowed to lie when you ask if they’re a cop.
The Immaculate Conception is about Mary’s birth, not Jesus’s, and it’s about original sin, not a virgin birth.
A black belt isn’t always the highest rank in a martial art.
The abbreviation “Xmas” was coined by medieval monks.
The Roman vomitorium wasn’t a room for vomiting; it was a stadium entrance.
Napoleon was 5’7”, slightly above average in 1800s France.
It’s OK to swim right after eating.
Glass doesn’t actually flow. Old warped windows were made that way.
Shaving doesn’t make hair grow back thicker.
Redheads aren’t going extinct.

What is Standard Costing?
Standard costing is the practice of substituting an expected cost for an actual cost in the accounting records, and then periodically recording variances showing the difference between the expected and actual costs. This approach represents a simplified alternative to cost layering systems, such as the FIFO and LIFO methods, where large amounts of historical cost information must be maintained for items held in stock.
Standard costing involves the creation of estimated (i.e., standard) costs for some or all activities within a company. The core reason for using standard costs is that there are a number of applications where it is too time-consuming to collect actual costs, so standard costs are used as a close approximation to actual costs. Since standard costs are usually slightly different from actual costs, the cost accountant periodically calculates variances that break out differences caused by such factors as labor rate changes and the cost of materials. The cost accountant may also periodically change the standard costs to bring them into closer alignment with actual costs.

What is Traditional Methods of Credit Analysis?

Credit analysis is the method by which one calculates the creditworthiness of a business or organization. In other words, It is the evaluation of the ability of a company to honor its financial obligations. Or, a bank may analyze the financial statements of a small business before making or renewing a commercial loan.
The objective of credit analysis is to look at both the borrower and the lending facility being proposed and to assign a risk rating. The risk rating is derived by estimating the probability of default by the borrower at a given confidence level over the life of the facility, and by estimating the amount of loss that the lender would suffer in the event of default.
Credit analysis involves a wide variety of financial analysis techniques, including ratio and trend analysis as well as the creation of projections and a detailed analysis of cash flows. Credit analysis also includes an examination of collateral and other sources of repayment as well as credit history and management ability. Analysts attempt to predict the probability that a borrower will default on its debts, and also the severity of losses in the event of default. Credit spreads—the difference in interest rates between theoretically "risk-free" investments such as U.S. treasuries or LIBOR and investments that carry some risk of default—reflect credit analysis by financial market participants.

What is the difference between Financial Accounting and Management Accounting

Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. ... Managerial accounting has its focus on providing information within the company so that its management can operate the company more effectively.

List of subjects for Diplomaed Associate of the Institute of Bankers, Bangladesh (DAIBB) Exam:

1. Management of Financial Institutions (MFI)

2. Lending Operation & Risk Management (LRM)

3. International Trade & Foreign Exchange (FE)

4. Information Technology in Financial Services (IT)

5. Management Accounting (MA)

6. Central Banking & Monetary Policy (CMP)
Agriculture & Microfinance (AM)
SME & Consumer Banking (SME)
Islamic Banking (Is. B)
Investment Banking & Lease Financing (ILF)
Treasury Management (TM)

List of subjects for Junior Associate of the Institute of Bankers, Bangladesh (JAIBB) Exam:
1. Principles of Economics & Bangladesh Economy (PBE).
2. Business Communication (BC).
3. Laws and Practice of Banking (LPB).
4. Organization & Management (OM).
5. Accounting for Financial Services (AFS).
6. Marketing of Financial Services (MFS).

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