2. What is Management
accounting
• Management
Accounting is the
process of
Measuring,
Analyzing and
Reporting Financial
and Nonfinancial
information that
helps managers
make decisions to
fulfill the goals of an
organization.
3. Objectives of
Management
accounting
Assist management providing
relevant information for
better decision making
• Provides Data
• Modify data
• Analyzes data
• Meaningful discussions
• Helps in achieving goals
• Uses qualitative
information
5. Functions of
Management accounting
• Providing Accounting
Information
• Cause and effect analysis
• Supplies Information and
not decision
• Use of Special Techniques
and concepts
• Increase in Efficiency
use accounting information in decision-making and to assist in the management and performance of their control functions
1. Provides data: It serves as a vital source of data for planning. The historical data captured by accounting shows the growth of the business, which is useful in forecasting.
2. Modify data – Provide what's useful for managers
2. Analyzes data: calculating ratios and projecting trends. This information then can be analyzed for planning and decision-making. For example, you can categorise purchase of different items period-wise, supplier-wise and territory wise.
3. meaningful discussions: discuss with data and take decision with data
4. Helps in achieving goals: It helps convert organizational objectives into feasible business goals. These goals can be achieved by budget control and standard costing, which are parts of management accounting.
5. Uses qualitative information: Management accounting does not restrict itself to quantitative information for decision-making. It takes into account qualitative information which cannot be measured in terms of money. Industry cycles, strength of research and development are some of the examples qualitative information that a business can collect using special surveys.
Providing Accounting Information: Management accounting is based on accounting information. The collection and classification of data
Cause and effect analysis: preparation of profit and loss account and finding out the result If there the factors different expenditures, current assets, interest payables, share capital, etc.
Supplies Information and not decision: The decisions are to be taken by the top management.
Use of Special Techniques and concepts. The techniques usually used include financial planning and analysis, standard costing, budgetary control, marginal costing, project appraisal, control accounting, etc.
Increase in Efficiency: The purpose of using accounting information is to increase efficiency of the concern. The efficiency can be achieved by setting up goals for each department.
COCLU
Management accounting helps in analysing and recording financial information which can be used by a company to increase its efficiency and productivity. It presents the financial information in regular intervals using easy-to-understand techniques such as standard costing, marginal costing, project appraisal, and control accounting. However, the information required to make managerial decisions depends completely on financial statements. Hence it becomes important to maintain error free records. Besides several disadvantages, it acts as a useful tool for better management of business.