Tools &Techniques ofTools &Techniques of
Management AccountingManagement Accounting
Financial Policy and AccountingFinancial Policy and Accounting
• Firmshasto takedecisionsabout sourcesof
• Issueof sharecapital or raising of loans.
• Proportion between sharecapital and loansareto
• Management accounting providestechniquesfor
Analysisof Financial StatementsAnalysisof Financial Statements
• Meansto classify and present thefinancial data
useful for themanagement.
• Financial analysisincludescomparativefinancial
statements, ratios, fund flow statements, trend
Historical Cost AccountingHistorical Cost Accounting
• Thepriceof an asset on thebalancesheet isbased
on itsnominal or actual cost when acquired by the
company isknown ashistorical cost accounting.
• Actual cost iscompared with standard cost to get
an ideaabout performanceof theconcern.
Budgetary ControlBudgetary Control
• It isasystem which usesbudgetsasatool for
planning and control.
• Budgetsfor all departmentsareprepared in
• Actual performanceiscompared with thepre-
• Helpsto assestheperformanceof each and every
Standard CostingStandard Costing
• Herecostsaredetermined in advance.
• Actual cost arerecorded and compared with the
• Variancesareanalysed and their reasonsare
• It helpsto enhancetheefficiency of theconcern.
Marginal CostingMarginal Costing
• Method of costing concerned with changesin
costsresulting from changesin thevolumeof
• It ishelpful for measurement of profitability of
different linesof production, different
departmentsand divisionsof an enterprise.
Decision AccountingDecision Accounting
• Decision making isan important work of
• It involvesachoicefrom variousalternatives
• Management Accounting calculatesfinancial
implicationsof each alternativecourseof action
and helpsmanagement to select best courseof
Revaluation AccountingRevaluation Accounting
Also known asReplacement Accounting
Batty definesRevaluation accounting as,
“ It is used to deno te the metho ds emplo yed fo r
o verco ming the pro blems co nnected with fixed
asset replacement in a perio d o f rising prices”
Control AccountingControl Accounting
• It isnot aseparateaccounting system.
• It isthemethodsand proceduresthat are
implemented by afirm to help ensurethevalidity
and accuracy of itsown financial statements.
• In controlling accounting wecan useinternal
check, internal audit, statutory audit.
Management Information SystemManagement Information System
• It isacomputerized databaseof financial
information organized and programmed in such a
way that it producesregular reportson operations
for every level of management in acompany.
• Dataplanning issupplied to management