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ACCOUNTING Management for Author’s Profi le Dr Satish B Mathur, Ph D (Business Management) and CAIIB, retired as Professor of Finance and Accounting at the Indian Institute of Management (IIM), Lucknow. He currently runs a consultancy fi rm: Mathur Management Consultants, and organises tailor-made company-specifi c in-company Management Development Programmes (MDPs) in the areas of fi nance and accounting, organisational behaviour and business law. Before joining IIM Lucknow, he was a senior member of faculty at the Administrative Staff College of India (ASCI), Hyderabad (1988–’95). Earlier, he was with the State Bank of India for over 27 years (1961–’88), wherein he held several senior executive positions in the areas of policy, planning, training and administration. By virtue of having such a vast and varied executive and teaching experience with senior executives of banks and other companies, he has developed credible knowledge and expertise in the area of corporate fi nance and management accounting. He has published several articles and papers in the national and international journals of repute, some of which have been used by the UNICEF in its international Management Development Programmes. His books titled Sickness in Small Scale Sector: Causes and Cures (Concept Publishing Company, 1999, New Delhi), Working Capital Management and Control (New Age International, 2002, Second Edition 2010, New Delhi), Understanding Balance Sheets and A textbook onFinancial Management (Macmillan India Ltd., New Delhi, 2005 and 2010, respectively), and his textbook on Business Law (Tata McGraw Hill, 2009, New Delhi), have been received very well by the academicians and students, as well as by the practising executives in the banks and industries. His other fi ve books in the organisational behaviour area titled The A to Z of Managerial Excellence (Global Business Press, 1995, Delhi), The A to Z of Management Mantras (Jaico Publishing House, 2002, Mumbai), The A to Z of Strategic Sutras (Rupa & Co., 2006, New Delhi), Principles of Effective Management – The Indian Experience (Himalaya Publishing House, Mumbai, 2010), and Mentoring Mantras for Indian Managers (Matrix Publishers, New Delhi, 2010), have gained immense popularity over the years. The Hindi transcription of his book The A to Z of Managerial Excellence (Global Business Press, 1995, Delhi), which has undergone six reprints by now, has been published by Hind Pocket Books under the title Uttam Prabandhan Ke 6 Niyam, and has gained much popularity soon after its publication. ACCOUNTING Management for Satish B Mathur Former Professor of Finance and Accounting Indian Institute of Management, Lucknow Administrative Staff College of India, Hyderabad State Bank Staff College, Hyderabad Tata McGraw Hill Education Private Limited NEW DELHI McGraw-Hill Offi ces New Delhi New York St Louis San Francisco Auckland Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal San Juan Santiago Singapore Sydney Tokyo Toronto Published by Tata McGraw Hill Education Private Limited, 7 West Patel Nagar, New Delhi 110 008. Accounting for Management Copyright © 2011, by Tata McGraw Hill Education Private Limited. No part of this publication may be reproduced or distributed in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise or stored in a database or retrieval system without the prior written permission of the publishers. 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However, neither Tata McGraw-Hill nor its authors guarantee the accuracy or completeness of any information published herein, and neither Tata McGraw-Hill nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this information. This work is published with the understanding that Tata McGraw-Hill and its authors are supplying information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought. Typeset at Anvi Composers, 19, A-B, DDA Market, Paschim Vihar, New Dehli 110063 and Printed at Avon Printers, Plot No, 16, Main Loni Road, Jawahar Nagar, Industrial Area, Shahdara, Delhi-110 094. Cover Design: K. Anoop Cover Printer: SDR Printers RAXCRRBZDDZAC To PGP Students of the Class of 1998 IIM, Lucknow