Monday, 3 January 2022
Question No. 5 - Accounting for Managerial Decisions
Friday, 31 December 2021
Question No. 4 - Accounting for Managerial Decisions
Solutions to Assignments
MCO-05 Accounting for Managerial Decisions
Question 4
(a) What do you mean by accounting reports? What are the different types of reports for internal use?
- Income statement
- Cash flow statement
- Balance sheet
Types of accounting reports
Income statement
Cash flow statement
Business operations
Financing
Investments
Balance sheet
Thursday, 30 December 2021
MCO-05 Accounting for Managerial Decisions
Solutions to Assignments
MCO-05 Accounting for Managerial Decisions
Question No. 1 - MCO-05
Solutions to Assignments
MCO-05 Accounting for Managerial Decisions
Question 1
(a) Distinguish among variable, fixed and semi-variable costs. Why is this distinction important?
- Fixed Cost
- Variable Cost
- Semi-Variable Cost
- Formula For Semi-Variable Costs
- Why Variable Costs Are Important
- How to Use Costs to Your Company’s Advantage
(b) How cash flow statement is different from income statement? What are the additional benefits to different users of accounting information from cash flow statement?
- Difference of Definition of Income Statement and cash flow statement
The income statement is one of the major parts of the financial statement. It is used to represent the revenues, gains, expenses and losses from operating and non-operating activities of the company. When the total revenues (including gains) exceed the total expenses, then the result would be the net income while if the total expenses (including losses) exceed total revenues, then the result would be the net loss.
Here operating activities state the activities which are related to the day-to-day business of the company like manufacturing, purchasing, selling and distribution of goods and services. Non- operating activities means the activities which are related to purchase or sale of investments, assets, payment of dividend; taxes; interest and foreign exchange gains or losses.
The cash flow statement is also an important part of the financial statement of a company. It is used to represent the cash inflows and outflows during the year from operating, investing and financing activities. The statement reflects the position of cash and cash equivalents at the beginning and end of the accounting year. It shows the movement of cash during the period.
Here operating activities include the basic activities of the company like manufacturing, purchasing, selling and distribution of goods and services. Investing activities include the purchase and sale of investments and assets. Financing activities include the issue and redemption of shares or debentures and other financing activities related to the dividend, interest, etc.
- Other key differences
The major difference between an income statement and cash flow statement is cash, i.e. the income statement is based on an accrual basis (due or received) while the cash flow statement is based on the actual receipt and payment of cash.
The income statement is classified into two main activities operating and non-operating, whereas the cash flow statement is divided into three activities operating, investing and financing.
The income statement is helpful in knowing the profitability of the company, but the cash flow statement is useful in knowing the liquidity and solvency of business which determines the present and future cash flows.
Incomes statement is based on accrual system of accounting, wherein incomes and expenses of a financial year are considered. On the other hand, cash flow statement is based on cash system of account, which only considers actual money inflows and outflows in a particular financial year.
The income statement by to taking into account various records and ledger accounts. As against this, cash flow statement is prepared considering the income statement and balance sheet.
Depreciation is considered in the income statement, but the same is excluded from cash flow statement because it is a non-cash item.
- Conclusion
All Questions - MCO-021 - MANAGERIAL ECONOMICS - Masters of Commerce (Mcom) - First Semester 2024
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