Paper 3: Cost Accounting and Financial Management<\/strong><\/p>\n (One paper \u2013 three hours – 100 marks)<\/strong><\/p>\n Level of Knowledge: Working knowledge<\/p>\n Part I: Cost Accounting (50 marks)<\/strong><\/p>\n Objectives:<\/p>\n (a) To understand the basic concepts and processes used to determine product costs;<\/p>\n (b) To be able to interpret cost accounting statements;<\/p>\n (c) To be able to analyse and evaluate information for cost ascertainment, planning, control and decision making; and<\/p>\n (d) To be able to solve simple cases.<\/p>\n Contents:<\/p>\n 1. Introduction to Cost Accounting<\/p>\n (a) Objectives and scope of cost accounting<\/p>\n (b) Cost centers and cost units<\/p>\n (c) Cost classification for stock valuation, profit measurement, decision making and control<\/p>\n (d) Coding systems<\/p>\n (e) Elements of cost<\/p>\n (f) Cost behavior pattern, separating the components of semi-variable costs<\/p>\n (g) Installation of a costing system<\/p>\n (h) Relationship of cost accounting, financial accounting, management accounting and financial management.<\/p>\n 2. Cost Ascertainment<\/p>\n (a) Material Cost<\/p>\n (i) Procurement procedures – store procedures and documentation in respect of receipts and issue of stock, stock verification<\/p>\n (ii) Inventory control – techniques of fixing of minimum, maximum and reorder levels, economic order quantity, ABC classification; stocktaking and perpetual inventory<\/p>\n (iii) Inventory accounting<\/p>\n (iv) Consumption – identification with products of cost centers, basis for consumption entries in financial accounts, monitoring consumption.<\/p>\n (b) Employee Cost<\/p>\n (i) Attendance and payroll procedures, overview of statutory requirements, overtime, idle time and incentives<\/p>\n (ii) Labour turnover<\/p>\n (iii) Utilization of labour, direct and indirect labour, charging of labour cost, identifying labour hours with work orders or batches or capital jobs<\/p>\n (iv) Efficiency rating procedures<\/p>\n (v) Remuneration systems and incentive schemes.<\/p>\n (c) Direct Expenses Sub-contracting \u2013 control on material movements, identification with the main product or service.<\/p>\n (d) Overheads<\/p>\n (i) Functional analysis \u2013 factory, administration, selling, distribution, research and development Behavioral analysis \u2013 fixed, variable, semi variable and step cost<\/p>\n (ii) Factory overheads \u2013 primary distribution and secondary distribution, criteria for choosing suitable basis for allotment, capacity cost adjustments, fixed absorption rates for absorbing overheads to products or services<\/p>\n (iii) Administration overheads \u2013 method of allocation to cost centres or products<\/p>\n (iv) Selling and distribution overheads \u2013 analysis and absorption of the expenses in products\/customers, impact of marketing strategies, cost effectiveness of various methods of sales promotion.<\/p>\n 3. Cost Book-keeping Cost ledgers \u2013 non-integrated accounts, integrated accounts, reconciliation of cost and financial accounts.<\/p>\n 4. Costing Systems<\/p>\n (a) Job Costing Job cost cards and databases, collecting direct costs of each job, attributing overhead costs to jobs, applications of job costing.<\/p>\n (b) Batch Costing<\/p>\n (c) Contract Costing Progress payments, retention money, escalation clause, contract accounts, accounting for material, accounting for plant used in a contract, contract profit and balance sheet entries.<\/p>\n (d) Process Costing Double entry book keeping, process loss, abnormal gains and losses, equivalent units, inter-process profit, joint products and by products.<\/p>\n (e) Operating Costing System<\/p>\n 5. Introduction to Marginal Costing Marginal costing compared with absorption costing, contribution, breakeven analysis and profit volume graph.<\/p>\n 6. Introduction to Standard Costing Various types of standards, setting of standards, basic concepts of material and labour standards and variance analysis.<\/p>\n 7. Budgets and Budgetary Control The budget manual, preparation and monitoring procedures, budget variances, flexible budget, preparation of functional budget for operating and non-operating functions, cash budget, master budget, principal budget factors.<\/p>\n Part II: Financial Management (50 marks)<\/strong><\/p>\n Objectives:<\/p>\n (a) To develop ability to analyse and interpret various tools of financial analysis and planning;<\/p>\n (b) To gain knowledge of management and financing of working capital;<\/p>\n (c) To understand concepts relating to financing and investment decisions; and<\/p>\n (d) To be able to solve simple cases.<\/p>\n Contents: 1. Scope and Objectives of Financial Management<\/p>\n (a) Meaning, importance and objectives<\/p>\n (b) Conflicts in profit versus value maximization principle<\/p>\n (c) Role of Chief Financial Officer.<\/p>\n 2. Time Value of Money Compounding and discounting techniques \u2013 concepts of annuity and perpetuity.<\/p>\n 3. Financial Analysis and Planning<\/p>\n (a) Ratio analysis for performance evaluation and financial health<\/p>\n (b) Application of ratio analysis in decision making<\/p>\n (c) Analysis of cash flow statement.<\/p>\n 4. Financing Decisions<\/p>\n (a) Cost of Capital \u2013 weighted average cost of capital and marginal cost of capital<\/p>\n (b) Capital Structure decisions \u2013 capital structure patterns, designing optimum capital structure, constraints, various capital structure theories<\/p>\n (c) Business risk and financial risk \u2013 operating and financial leverage, trading on equity.<\/p>\n 5. Types of Financing<\/p>\n (a) Different sources of finance<\/p>\n (b) Project financing \u2013 intermediate and long term financing<\/p>\n (c) Negotiating term loans with banks and financial institutions and appraisal thereof<\/p>\n (d) Introduction to lease financing<\/p>\n (e) Venture capital finance.<\/p>\n 6. Investment Decisions<\/p>\n (a) Purpose, objective, process<\/p>\n (b) Understanding different types of projects<\/p>\n (c) Techniques of decision making: non-discounted and discounted cash flow approaches – payback period method, accounting rate of return, net present value, internal rate of return, modified internal rate of return, discounted payback period and profitability index.<\/p>\n (d) Ranking of competing projects, ranking of projects with unequal lives.<\/p>\n 7. Management of working capital<\/p>\n (a) Working capital policies<\/p>\n (b) Funds flow analysis<\/p>\n (c) Inventory management<\/p>\n (d) Receivables management<\/p>\n (e) Payables management<\/p>\n (f) Management of cash and marketable securities<\/p>\n (g) Financing of working capital.<\/p>\n","protected":false},"excerpt":{"rendered":" Cost Accounting and Financial Management ICAI Syllabus Paper 3: Cost Accounting and Financial Management (One paper \u2013 three hours – 100 marks) Level of Knowledge: Working knowledge Part I: Cost Accounting (50 marks) Objectives: (a) To understand the basic concepts and processes used to determine product costs; (b) To be able to interpret cost accounting … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[4731],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/21611"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=21611"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/21611\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=21611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=21611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=21611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}