Introduction to Management Accounting - Gaurav Dudi Student at SGT University - https://sgtuniversity.ac.in/ Faculty of Commerce and Management

1. INTRODUCTION TO
MANAGEMENT ACCOUNTING
S U B M I T E D T O S U B M I T E D B Y
D R . S U N I L V E R M A G A U R A V D U D I
1 5 0 6 0 2 0 1 7
S G T U N I V E R S I T Y
F A C U L T Y O F C O M M E R C E & M A N A G E M E N T , B B A ( G ) 5 T H S E M

2. DEFINITION
Management Accounting is that branch of accounting which deals with presenting and
providing accounting information to the management in a systematic way so that it can
perform its management functions of planning, controlling and decision-making in an
effective and efficient manner.
According to American Accounting Association, Management Accounting is “the
application of appropriate techniques and concepts in processing historical and
projected economic data of an entity to assist management in establishing plans for
reasonable economic objectives and in the making of rational decisions with a view
towards these objectives”.

3. ORIGIN OF MANAGEMENT ACCOUNTING
• The concept of Management Accounting was not known to the business
world until 1950.
• This term was first formally described in a report entitled “ Management
Accounting ” in 1950.
• This report was published by the Anglo American council of productivity
management accounting team after its visit to US in first quarter of 1950

4. NATURE OF MANAGEMENT ACCOUNTING
• Analysis and Interpretation of data
• Planning, Decision making and Control
• Responsibility centers
• Future oriented
• Serves as yardstick

5. SCOPE OF MANAGEMENT ACCOUNTING
• Financial Accounting: Financial Accounting provides historical
information useful for future planning and financial forecasting.
• Cost Accounting: It provides various techniques of costing which are
used in the process of planning and decision-making.
• Forecasting and budgeting: Management Accounting exercises the tool
of forecasting and budgeting in the process of planning, controlling and
decision-making.
• Tax accounting and Tax planning: the analysis of implication of tax
provisions on future projects comes under management accounting.

6. FUNCTIONS OF MANAGEMENT
ACCOUNTING
• Collection of data
• Modification of data
• Analysis and interpretation of financial statements
• Use of qualitative information also
• To help in planning
• To help in organising
• To help in coordination
• To help in motivation
• Communicating up to date information
• To help in control.

7. TOOLS & TECHNIQUES OF
MANAGEMENT ACCOUNTING
 Financial Statement Analysis
 Fund Flow Analysis
 Cash Flow Analysis
 Budgetary Control
 Standard Costing
 Marginal Costing
 Management Reporting
 Statistical and Operations Research techniques

8. ADVANTAGES OF MANAGEMENT
ACCOUNTING
• Planning
• Controlling
• Coordination
• Performance evaluation
• Organizing
• Motivating
• Communicating
• Decision making

9. LIMITATIONS OF MANAGEMENT
ACCOUNTING
• Can not rely on accounting data
• Highly expensive
• Complicated application
• Lack of objectivity
• Based on historical data.

10. ROLE OF MANAGEMENT ACCOUNTANTS
• The management accountant will established coordinate and administer plan to
facilitate the forecasting of sales, expense budgets and cost standards that will
permit profit planning, capital budgeting and financing.
• The management accountant will be formulate accounting policies and procedures.
• The management accountant will be responsible for the protection of business assets
to the external possible by external controls and internal auditing and insurance
coverage.
• The management accountant will be responsible for the tax policies and procedures
and will supervise and coordinate the reports required by various authorities.
• The management accountant must continually be aware of economic and social
forces as well as the effect of government policies and action on business activity.