1.5 ACCOUNTING AND FINANCIAL INFORMATION SYSTEMS

UNIT - I

Developing an accounting database
Nature and role of accounting information, Accounting databases.
Financial and cost management accounting. Integrated accounting system.

UNIT - II

a) Financial accounting database: Principles of double entry book keeping, Accounting equation, concepts and conventions. Elements in Financial Accounting System: Books of original record, ledger, Trial balance, Income Statement, Balance Sheet.
b) Financial statement analysis: Horizontal and vertical analysis, Ratio analysis - tests of liquidity, tests of solvency, tests of profitability, market tests, Interpretation and use of financial ratios.

UNIT - III

Cost accounting database: Cost flows and concepts, Concept of cost: cost object. Product costing. Manufacturing cost elements. Production flow and cost flow; Manufacturing inventories, Production cost and period costs. The schedule of cost of goods manufactured. Production resources and Inventory cost flows. The significance of product cost. Cost behavior : Cost and expense. Product costing systems. Recording cost flows.

UNIT - IV

Cost data for decision making:C.V.P. Analysis & variable costing. Report generation for decision-making.

UNIT - V

Planning, control and responsibility reporting:
a) Budgeting Reasons and functions of budgets; fundamentals of budgeting. Types of budgets operating and financial budgets. Static and flexible budgets; master and functional divisional budgets. Control through budgeting. Preparation and presentation of budget reports.

b) Responsibility accounting: Responsibility center. Controllable and non-controllable costs. Control through ROI in divisionalised set up and its limitations.

Suggested Readings
1.Horngren: Cost Accounting: A Managerial Emphasis Prentice Hall Publications.
New - Delhi. 1988.
2.Losler E. Heitger & Sage Matulliah: Managerial Accounting McGraw Hill Book
Company.
3.James & Davis: Accounting Information Systems, 1980.
Further Readings:
1.Fenny, H.A.Muller Herbert E: Accounting Process; A Programmed Approach.