Management Accounting

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  • Every organization-large and small-has managers. Someone must be responsible for making plans, organizing resources, directing personnel, and controlling operations. Every where mangers carry out three major activities-planning, directing and motivating, and controlling.Advantages of m.aEfficient planningEfficient business operationsEfficient controlOptimum labour efficiencySatisfaction of customersEfficiency of management
  • 1.basic objective is to make management more efficient2.Makes use of accounting and statisticalsmethodsto represent the accounting and other information in the most suitable form.3.Under m.a. the accounting information is further analyzed for better understanding and decision making.4.M.a. helps management in envasiging and formulating realistic plans.5.M.a. measures the execution of the plan so as to know whether or not the desired efficiency has been achieved.6.Various reports – budgets, product costing data
  • Scope of Management Accounting                Scope of management accounting is very vast and includes various aspects of the business activities. Management accounting has its scope in the following fields or systems:1.  Financial accounting :-  It is the foremost and indispensable part of accounting. In this system, business transactions of financial character are recorded in the proper subsidiary book. Posting of these transactions is done in ledger and from this the final accounts are prepared. Final accounts include profit and loss account and balance sheet. Profit and loss account represents the profit/loss earned during the accounting period and the balance sheet represents the financial position of a company as on a particular date. Financial accounting is the foundation from management accounting as it provides the necessary information for prepration of details and reports to be presented to the management.2.  Cost Accounting :-  Cost accounting is one of the important branches of accounting. It ascertains the cost of producing a particular commodity and rendering of services cost of selling and distribution. It facilitates effective planning regarding commodities, proper decision-making and cost control. Some of the important tools of cost accounting are marginal costing, standard costing and budgetary control.3.  Revaluation accounting :- Revaluation accounting ensures that capital is represented at its real value in the accounts and the profit has been calculated keeping this fact in mind. In other words, it assures that the assets are revalued according to the need and its effect has been brought into the accounts. Management accounting helps to ascertain the revalued figures of the assets.4.  Control accounting :- Controlling means to measure the variation, if any, between actual and the standard results and taking corrective measures to remove that variation. Management accounting is the indispensible part of control accounting, budgetary control, inventory control, equality control are some of the important techniques of management accounting for control accounting.5.  Statistical methods :- Management accounting is concerned with presentation of accounting information in the most impressive and understandable manner. It makes use of graphs, charts, index numbers, pictorial presentation and other statistical methods in order to make the information more intelligible. For scientific analysis of financial statement and accounting  information various statistical techniques such as mean, standard duration, cov., correlation, t-test, etc and used in management accounting.6.  Interim reporting :- Interim reporting means preparation of reports on monthly, quarterly and half-yearly basis. These reports include income statement, cash flow statement, funds flow statement, scrap reports etc.7. Internal audit :-  Internal audit means audit of various departments by the internal members of the organization. The techniques of management accounting can be used to judge the efficiency and economy of the organization. Ratio analysis and funds flow analysis are widely used to judge the efficiency of an organization.8. Taxation :-  Tax planning and its management is an essential function of the management. It includes computation of income as per tax laws, filing of returns and payment of tax within stipulated time. 
  • Based on Accounting Information: Mgt Acccounting is based on data of Financial and Cost Accounting. Historical data is used to make future decisions. The correctness and effectiveness of managerial decisions will depend upon the quality of data on which these decisions are based. If financial data is not reliable then Mgt Accounting will not provide correct analysis. Lack of Knowledge: the application of Mgt Accounting will be useful to person connected with Decision making process as they have proper understanding of Mgt Accounting and related subjects such as Statistics, Economics, Prinples of Mgt, Engineering etc., Intuitive decision: In Mgt Accounting decision making based on facts and figures, there is a tendency to make decisions intuitively. Mgt may avoid lengthy courses of deciding things and may take an easy course of arriving at decision, using intuitive. Interitive decisions limits the usefulness of Mgt Accounting. Not an alternative to Administration: The tools and techniques of Mgt Accounting provide only information and not decision. Decisions and their implementations are done, by Mgt. So it has supplementary service function and has no final say in taking decisions and their implementations. Top heavy structure: Introduction of this system is costly affair and can be used by big concerns only. Smaller concerns cant afford to use this system because of heavy cost. Evolutionary state: Mgt Accounting is only in a developmental stage. The technique and tools used by this system give differing results. The conclusions taken from analysis and interpretation are not the same. It will take some time to take a final shape. Personal Bias: The interpretation of financial information depends upon the personal judgement of the interpreter. Personal prejudices and bias affect the objectively of decisions. Psychological Resistance: The Installation of Mgt Accounting involves basic changeless in organizational setup. New rule and regulations are to be framed which affect a number of personnel and hence there is a possibility of resistance from some or other.
  • Management Accounting

    1. 1. Management Accounting<br />By : GaganPareek<br />Harish Nath<br />ChandanPriyadarshi<br />Karan Sobti<br />Sandeepkumar A<br />SabyasachiBehura<br />AnuraagAtal<br />
    2. 2. Management Accounting Is a tool which identifies the health of a company for its internal authorities through accounting functions.<br />What is Mgmt Acc ?<br />
    3. 3. Why Management Accounting<br />
    4. 4. Significance of Fin Statement over Managerial Statement<br />
    5. 5. Difference…..<br />
    6. 6. Basic objective is to make management more efficient<br />Makes use of accounting and statistical methods to represent the accounting and other information in the most suitable form.<br />Under Mgmt Actg the accounting information is further analyzed for better understanding and decision making.<br />Mgmt Actg helps management in envisaging and formulating realistic plans.<br />Mgmt Actg measures the execution of the plan so as to know whether or not the desired efficiency has been achieved.<br />Various reports – budgets, product costing data<br />Elements/Scope of Mgmt Actg<br />
    7. 7. Areas under Mgmt Actg?<br />
    8. 8. Limitations of Mgmt Actg<br />
    9. 9. Management Accounting and Decision Making<br />
    10. 10. SIX STEPS TO EFFICIENT DECISION MAKING<br />
    11. 11. Management accounting not only plan formulation but also Decision Making and to measure how much desired efficiency has been achieved.<br /> <br />Statistical tools and techniques for effective decision making<br />BUDGETING<br />ACCOUNTING RATIOS<br />FLOW OF FUNDS STATEMENT<br />STANDARD COSTING AND VARIANCE ANALYSIS<br />BREAK-EVEN ANALYSIS<br />RESPONSIBILTY ACCOUNTING<br />MANAGEMENT REPORTING<br />STASTISCAL ANALYSIS<br />Decision Making Cont….<br />
    12. 12. Mgmt Actg and Decision Making<br />
    13. 13. Thank You<br />

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