Chapter 6 - management accounting

Here's your 🔥 Unit-wise Complete Revision Guide (Formulas + Formats + Theory) for

Management Accounting – 3rd Year B.Com (University of Madras)

This is structured exactly for last-day revision + exam writing.

📘 UNIT 1: INTRODUCTION TO MANAGEMENT ACCOUNTING

✅ Key Theory

Definition: Use of accounting data for decision-making

Nature:

Future-oriented

Analytical

Decision-based

✅ Objectives

Planning

Controlling

Decision-making

Coordination

✅ Tools

Ratio Analysis

Cash Flow

Budgetary Control

Marginal Costing

✅ Advantages

Helps management decisions

Improves efficiency

❌ Limitations

Based on estimates

No fixed rules

📘 UNIT 2: FINANCIAL STATEMENT ANALYSIS

✅ Comparative Statement (Format)

Particulars

Year 1

Year 2

Change

% Change

✅ Common Size Statement (Format)

Particulars

Amount

Percentage

👉 Formula: % = (Item / Base value) × 100

✅ Trend Analysis

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✅ Key Theory

Helps comparison

Identifies growth trend

Useful for decision-making

📘 UNIT 3: RATIO ANALYSIS

✅ Liquidity Ratios

Current Ratio = Current Assets / Current Liabilities

Quick Ratio = Liquid Assets / Current Liabilities

✅ Profitability Ratios

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Net Profit Ratio = Net Profit / Sales × 100

✅ Leverage Ratios

Debt Equity Ratio = Debt / Equity

✅ Format Tip (Exam)

Write Formula → Calculation → Result → Comment

📘 UNIT 4: CASH FLOW STATEMENT

✅ Format (Very Important)

Cash Flow Statement

A. Operating Activities

Net Profit

Add: Non-cash items

Less: Changes in working capital

B. Investing Activities

Purchase/Sale of assets

C. Financing Activities

Issue of shares

Loans

✅ Key Formula

Cash from Operations =

Net Profit + Non-cash expenses ± Working capital changes

✅ Steps

Start with net profit

Adjust non-cash items

Adjust working capital

Add investing & financing

📘 UNIT 5: MARGINAL COSTING (VERY IMPORTANT)

✅ Key Formulas

Contribution

Contribution = Sales – Variable Cost

P/V Ratio

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Break Even Point

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Margin of Safety

MOS = Actual Sales – BEP Sales

✅ Key Concepts

Fixed Cost → constant

Variable Cost → changes with output

Contribution → profit earning capacity

✅ BEP Chart (Theory Point)

X-axis → Output

Y-axis → Cost & Revenue

📘 UNIT 6: BUDGETARY CONTROL

✅ Budget

Financial plan for future

✅ Types

Fixed Budget

Flexible Budget

Cash Budget

✅ Flexible Budget Formula

Cost changes with activity level

✅ Cash Budget Format

Particulars

Month 1

Month 2

Month 3

Opening Balance

Add: Receipts

Less: Payments

Closing Balance

✅ Advantages

Better planning

Cost control

❌ Limitations

Time consuming

Based on estimates

🎯 MOST IMPORTANT FORMULAS (FINAL REVISION)

Contribution = Sales – Variable Cost

P/V Ratio

BEP

Margin of Safety

Current Ratio

Gross Profit Ratio

Cash from Operations

✍️ HOW TO WRITE IN EXAM (VERY IMPORTANT)

For Theory:

👉 Definition

👉 4–5 Points

👉 Conclusion

For Problems:

👉 Formula

👉 Substitution

👉 Answer

⚡ LAST MINUTE STRATEGY

If time is less, study only:

Marginal Costing (Full)

Cash Flow Statement

Ratio Analysis

Financial Statement Analysis

👉 This alone can get 60+ marks

If you want, I can also give: ✅ Important 10-mark answers (ready to mug up)

✅ Previous year question paper (University of Madras)

✅ Expected 2026 questions with answers

Just tell me 👍