Management accounting provides accounting information to assist management in policymaking and day-to-day operations. It aims to promote efficiency, interpret financial statements, and systematically allocate responsibility. Management accounting analyzes monetary and non-monetary transactions, compares actual to planned performance, and prepares budgets covering all business functions. It creates harmony between management and employees, enables improved customer service, and helps avoid seasonal fluctuations through planning and forecasting.
2. MANAGEMENTACCOUNTNG DEFINED
• Management accounting is the presentation of accounting information in
such a way so as to assist management in the creation of policy and in the
day-to-day operations of an undertaking.
3. objectives
• Toassist the management in promoting efficiency.
• Tointerpret financial statements to enable the management to formulate
future plans.
• Toarrange for the systematic allocation of responsibility for
implementation of plants and budgets.
4. objectives
• Toanalyze monetary and non monetary transactions.
• Tocompare the actual performance with plan & identifying deviations and
their causes.
• Toprepare budget covering all functions of business.
5. Need and importance of management
accounting
• Creates harmony between the management & employees.
• Enables the management to improvise its services to its customers.
• Various operations can be planned with the help of accounting information,
budgeting & forecasting.
• Avoid business from facing seasonal fluctuations.
• Helps in communicating up to date information to various parties interested
in successful working of the business organization.
6. Need and importance of management
accounting
• The use of management accounting may controlled or even eliminate
various types of wastages.
• The management aims to control the cost of production and at the same
time increase efficiency of employers.
• Different tools of management accounting have provided validity,
objectivity & reliability in business management.
7. Functions
1.Forecasting
• Making shorterm & longterm finance and planning the business for future
operations.
2.Organising
•Organising the human & physical resources of the business.
3.Coordinating
• Providing different tools for coordination.
8. Contd..
4.Controlling
Controlling performance by using standard costing, marginal costing and
budgetary control.
5.Analysis and interpretation
6.Communicating
7.Economic appraisal
Appraisal of social & economic forces, govt. policies and interpret their
effect on business.
9. SCOPE OF MANAGEMENT ACCOUNTING
• Management accounting is concerned with presentation of accounting
information in the most useful way for the management.
• Its scope is, therefore, quite vast and includes within its fold almost all
aspects of business operations.
Financial Accounting: Management accounting is mainly concerned
with the rearrangement of the information provided by financial
accounting. Hence, management cannot obtain full control and
coordination of operations without a properly designed financial
accounting system.
10. Contd.
Cost Accounting: Standard costing, marginal costing, opportunity
cost analysis, differential costing and other cost techniques play a
useful role in operation and control of the business undertaking.
RevaluationAccounting: This is concerned with ensuring that capital
is maintained intact in real terms and profit is calculated with this fact in
mind.
Budgetary Control: This includes framing of budgets, comparison of
actual performance with the budgeted performance, computation of
variances, finding of their causes, etc.
11. Contd.
Inventory Control: It includes control over inventory from the time it is
acquired till its final disposal.
Statistical Methods: Graphs, charts, pictorial presentation, index
numbers and other statistical methods make the information more
impressive and intelligible.
Taxation: This includes computation of income in accordance with the
tax laws, filing of returns and making tax payments.
12. LIMITATIONS OF MANAGEMENT ACCOUNTING
• Based on accounting information
• Wide scope-leads to inaccurate results
• Costly-installation
• Evaluationery stage
• Opposition to change- rearrangement of rules and regulations maynot be
liked by people.
13. Who is Management accountant?
• The officer who is concerned with management accounting function in an
organization is known as management accountant.
14. Functions of management accountant
• Toassure physical protection for the business through internal control &
proper insurance coverage.
• Toconsult with all segments of management.
• Toadminister the tax policies & procedures
• Tosupervise & coordinate preparation of reports to govt. agencies.
• To compare performance with operating plan & standards & to report and
interpret the results of operations to all levels of management and owners
of business as well.
15. Functions of management accountant
• Toestablish, coordinate, administer an integral part of management, an
adequate plan for the control of operations.
• Tocontinuously appraise economic & social forces & govt. influences and
interpret their effect on business.
16. Duties of a management accountant
• To maintenance of adequate records of all contracts and leases.
• The preparation as a budget director, in conjunction with other officers of an
annual budget, covering all activities of the corporation for submit to board of
directors prior to the fiscal year.
• The preparation & interpretation of all statistical records & reports of the
corporation.
• The costing of all physical inventories.
• The compilation of productioncosts.
• Continuous audit of all accounts & records of the corporation wherever located.
17. Contd.
• The compilation of costs of distribution.
• The installation & interpretation of all accounting records of the
corporation.
• The preparation & interpretation of the financial statements & reports of
the corporation.