Define Management accounting

 Management accounting is concerned with the provisions and use of accounting information to  managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions.

According to the Chartered Institute of Management Accountants (CIMA) that Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources.

The American Institute of Certified Public Accountants (AICPA) states that management accounting practice extends to the following three areas:

• Strategic Management— advancing the role of the management accountant as a strategic partner in the organization.

• P e r f o r m a n c e M a n a g e m e n t — developing the practice of business decision-m a k i n g a n d managing the performance of the organization.

• Variable costing— contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

Variance Analysis

 Variance  analysis,  in  budgeting  or  management  accounting,  is  a  tool  of budgetary control by evaluation of performance by means of variances between budgeted amount, planned amount or standard amount and the actual amount incurred/sold. Variance analysis can be carried out for both costs and revenues. Variance analysis is usually associated with a product costs. In this setting, variance analysis attempts to identify the causes of the differences between 1) standard costs of the inputs that should have occurred for the actual products it manufactured, and 2) the actual costs of the inputs used for the actual products manufactured.

Lease finance Vs. Hire Purchase finance

 Hire purchase is a purchase of an asset in which customer makes down payment and finance rest of the amount through financial institutions or banks. On rest of the unpaid amount he pays interest at a certain pre-described rate of interest.

After making complete payment the assets becomes the legal right of customer. Lease on the other hand is an agreement of using asset for certain period and paying rent on it at a pre-described rate of interest. It is a temporary acquiring of an asset just to use it. Generally Pvt schools are build on lease land. Interest on lease is fully exemption from tax.

Particulars	Lease	Hire Purchase
1. Ownership of Asset	Ownership lies with the lessor. Lessee has the right to use only.	Hirer becomes the owner subject to full installment is paid.
2. Depreciation	It is claimed as an expense in the books of lessor.	It is allowed to the hirer in case of hire purchase transaction.
3. Rental Payments	Rentals cover the cost of using an asset.	Installment is inclusive of the principal amount and the interest for the time period the asset.
4. Duration	It is done for longer duration.	It is done mostly for shorter duration
5. Tax Impact	Total lease rentals are shown as expenditure.	Hirer claims the depreciation of asset as an expense.
6. Repairs & Maintenance responsibility	Lessor is responsible in case of operating lease.	Hirer is responsible.