Introduction of management accounting

1. Submitted To : Dr. Sunil
Verma
Professor of Management
Accounting
SGT University , Gurugram
Submitted By : Nisha Kumari
BBA (general) sec A
Roll No. 150602025

2. In management accounting or managerial
accounting, managers use the provisions
of accounting information in order to better inform
themselves before they decide matters within their
organizations, which aids their management and
performance of control function.

3.  “The presentation of accounting information in
such a way as to assist management in the
creation of policy and in the day-to-day
operation of an undertaking”.
- Sizer J.

4.  Strategic management—advancing the role of
the management accountant as a strategic
partner in the organization.
 Performance management—developing the
practice of business decision-making and
managing the performance of the organization.
 Risk management—contributing to
frameworks and practices for identifying,
measuring, managing and reporting risks to
the achievement of the objectives of the
organization.

5.  Assistance in Planning and Formulation of Future Policies:
Management accounting assists management in planning the activities
of the business. Planning is deciding in advance what is to be done, when
it is to be done, how it is to be done and by whom it is to be done. It
involves forecasting on the basis of available information, setting goals,
framing policies, determining the alternative courses of actions and
deciding on the programme of activities to be undertaken.
 Helps in the Interpretation of Financial Information:
Accounting is a technical subject and may not be easily understandable
by everyone till the user has a good knowledge of the subject.
Management may not be able to use the accounting information in its raw
form due to lack of knowledge of accounting techniques.

6.  Helps in Controlling Performance:
Management accounting is a useful device of managerial control. The
whole organisation is divided into responsibility centres and each centre
is put under the charge of one responsible person. He will be associated
with the planning and framing of the budgets and be required to execute
the plans and standards and deviations are analysed in order to pinpoint
the responsibility.
 Helps in Organizing:
Thus management accountant recommends the use of budgeting,
responsibility accounting, cost control techniques and internal
financial control. This all needs the intensive study of the organisation
structure. In turn, it helps to rationalise the organisation structure.

7.  Helps in the Solution of Strategic Business Problems:
Whenever there is a question of starting a new business, expanding or
diversifying the existing business, strategic business problem has to be
faced and solved.
 Helps in Coordinating Operations:
Management accounting helps the management in co-coordinating the
activities of the concern by getting prepared functional budgets in the
first instance and then co-coordinating the whole activities of the concern
by integrating all functional budgets into one known as master budget.
Thus, management accounting is a useful tool in coordinating the various
operations of the business.
To be continued . . .

8.  Helpful in Decision Making:-
It is an important feature of management accounting. In
fact, it helps the management of organization by providing
relevant and accurate information from various sources (like
financial and cost accounting) in order to make sound
decisions to remove business problems.
 Provides Data, Not the Decision:-
It only provides required data and information to the
management, not the decision. It is up to the management that how
they utilize the available data and information to resolving the
business problems through taking effective decisions.


9.  Selective in Nature:-
It is also a potent characteristic of this accounting system.
Here selective means, in management accounting a
management accountant is only collect those data and
information from a variety of alternatives which may create
more benefits and easiness to the management in decision
making. Hence, it is selective in nature.
 Assist in Achieving Objectives:-
Management Accounting is always assist organization in
achieving its predetermined goals. Because it provides detailed
information in regarding the weakness and the strength of
organization in the form of report, on the basis of that any
organization can eliminate recognized weakness (business problems)
and may achieve its goal easily.
To be continued . . .

10.  Related to Future:-
Management Accounting is an accounting system which is
directly related to future course of events. It means by preparing
this account any organization can forecast its future on the basis
available information in relating the past events (Historical data).
 Increase in Efficiency:-
It also plays an essential role in increasing efficiency of
organization. As we know that in this competitive business age it
is difficult for every organization to carry out its entity for ever.
Hence to survive for long run it is important for organization to
increase its efficiency by finding the errors and removing it
through management accounting techniques (standard costing,
budgetary control, control accounting).
To be continued . . .

11.  Use of Special Techniques:-
Management Accounting uses special tools or techniques (like
standard costing, budgetary control, control accounting, marginal costing
etc) for composing the accounting information and data more accurate
and relevant. So that management can easily make their decisions. The
type of technique to be applied will be determined according to the
situation and necessity.
To be continued . . .