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Management Accounting

THE WEBSITE IS ABOUT MANAGERIAL ACCOUNTING. EXPLAINED IN PLAIN LANGUAGE. ABOUT ACCOUNTING WITH LOVE

How to recognize the proper management accounting

So, if your management accounting is right: You can get Balance sheet and Profit and loss account at the beginning of the month following the reporting one. If you have an ordinary commercial or industrial enterprise without any extraordinary features, you are able to have the statements for the previous month ready within the first 10 days (or even 5 days) of the following one provided your management accounting is proper. Your accountant can explain you in simple terms...

How to Implement Management Accounting

Firstly, let’s clarify: What does Management Accounting mean? This is the type of accounting, the data  of which  serves as a basis for enterprise managers of different levels to make their managerial decisions. How to implement management accounting at an enterprise. Actually, you do not have to do something extraordinary. Stage I.  Determine a person who will perform management accounting. Stage II. Determine the chart of accounts to be used in management accounting. Stage III. Describe all business processes of the enterprise. Stage IV. Approve and adopt...

How to prepare a profit and loss account

This statements is the most interesting for the company management, as it shows the performance of the enterprise for the accounting period.   Let’s examine the simplest form of the statement:       The report is divided into two parts:  Profit;  Loss.   In Profit part we should deduct the cost of the goods sold (line 2) from the sales volume for the accounting period (line 1). This way we get the gross profit (line 3). I insist on using the gross profit rate (line 4), as this is an indicator of your profit share...

How to keep records in construction for objects using Excel

In this article, we consider a way of maintaining costs for facilities in a small enterprise in construction or other unit production. Please note that this is not a complete accounting method. Full accounting is maintained in specialized accounting programs (such as 1C). But if for some reason you want to keep a “blitz account”, then this method is suitable for you. In fact, this is an accounting of expenses using the cash method, which I write about in the article...

How to draw up a corporate budget in terms of the subdivisions

Someday any large enterprise with the managerial accounting will need to draw up an expenditure budget for the subdivisions.   There are few ways of expenses planning if considering the work of the subdivisions, but I would like to mention one of them which I find the most effective and quite simple:   Economic Department distributes the form of the expenses plan for the period (month, quarter, year) to the heads of structural subdivisions. This form is similar to the form of the profit and loss account, but each expense item...

How to prepare a cash flow statement.

This statement shows the flow of funds through the bank accounts and cash office of the enterprise. There are two ways how to construct it: Direct method. Indirect method. I will not describe the second method as I have never used it. If you are interested in it, you can visit this page and this one Let’s turn to the direct method. The statement is divided into three sections: Operating; Investing; Financing. The operating section includes the cash flows in terms of basic company’s activity. The investing section shows the...

How to develop an account policy

It is the most contradictory document in management accounting system. It is said to be an integral part of enterprise documentation, but in most cases hardly can we find it (remember, we are talking about the account policy in management accounting system), and if we succeed in finding it, it is rarely used at the enterprise. Let’s try another way. So, «Account policy» is a set of rules concerning accounting or management accounting, aimed at reaching the top level of transparency in...

Operation plan for payments for a period, day, week, decade.

This is another version of the operation plan table (a continuation of the previous article about the operation plan).Operation plan for the period Table 1 Let's overview it in detail.Line 2 "Current date" - the current date automatically updates in this table in cell D2. Cell D3 "Beginning of the planned period" - you indicate the date of the beginning of the period here. Cell D4 "End of the planning period" - you indicate the date of the end of the period. When you...

How to construct the managerial balance sheet

Main financial statement showing the management accounting system and financial position of the enterprise for the accounting period Balance sheet has three functions: Verifying. Informative. Analytical. Now, let’s have a closer look:   1. Verifying.   If your accounts are balanced (that is assets equal to liabilities), it means that all the operations had been posted correctly and there are no mistakes in calculations or those made through lack of attention (i.e. the goods have been shipped, but the debt has not been increased). So, the given balance...

Operation plan for payments for the month

The easiest and the most required table in the business industry will be overviewed in this article. That is the operation plan for payments.The table itself can be of different sizes and types. Moreover, each company can make its table, which will match their needs. Now I will describe a variant of the table for the operation plan for the month. Operation plan for the month Let's overview it in detail.Line 2 "Current date" - this table automatically updates the current...