CSC- 223– Software Engineering Economics
Question No 1:
Explain the following with example. If diagram required mention it
Accounting vs Controlling
Accounting Is the part of finance. It is the process of recording and measuring
financial transactions to know the expected outcome of an Organization’s
investment. It tracks the assets, liabilities, expenses, revenue, and equity. In
organizations that are for profit. Accounting is related to return of investment,
while in not–for–profit and government organizations as well as “for–profit”
organizations, it relates to sustainably staying in business.
For Example, there is an Accounting Section in University which keep on record of
all student fees and staff monthly income and manage university financial
transactions
While Controlling is an element of finance and accounting. It involves monitoring,
measuring and controlling the performance of finance and accounting. Controlling
maintains the cash flow of an organization and ensures the resource management
of an organization. It can prevent an organization from any undesirable activity
such as fraud, theft etc.
For Example, there is a Controlling body in bank which always track of bank in and
out flow of cash to prevent any fraud
Finance vs Cash Flow
Finance is the branch of economics which is concerned with money management
which includes the activity such as investment, saving, budgeting, and forecasting.
With Software Engineering organization, Finance is an important element of all
organizations.it deals with companies’ risk, time, money and the relation of their
interrelations.
For Example:
Ali is thinking of doing Software Engineering course from famous institute but he
doesn’t have enough funds. In that case he can think of taking education loan as a
long-term finance option. By taking education loan he can choose flexible option
to repay it either in 5 years or 10 years of period. This is the example of long-term
Finance
While cash flows are the total amount of money or assets coming in or out of an
organization, business or project in a given period of time. Assets or cash flows
are revenue when assets or cash flows are outflow.
For example, Cash Flows to a Bank Account will be a record of debut or credit.
Earned Value Management
Earned Value Management is the method or technique of project management to
measure the amount of work performed or progress base on created value. Often
the term earned value can be defined as the budget cost of a project. It provides a
method through which the project can be measured by the progress achieved. it
is used on the cost and time control and can also be very useful in project
forecasting. In short, a deep comparison of results achieved to date and projected
budget and the planned schedule progress for that date is made to estimate the
value earned by the project
For Example
Let Suppose a task budget is defined $1000 and the task is completed 40% so
earned value can be define by a formula i.e., EV = Percent Complete (actual) x
Task Budget
So, EV = 40%* $1000;
EV = $400
