Key Topics Covered: ✔ Meaning and definition of Management Accounting ✔ Objectives and scope ✔ Functions of management accounting ✔ Advantages and limitations ✔ Importance in modern business

1. Management Accounting
Overview, Functions, Nature, Scope, Objectives & Limitations
Dr. R. Devi Prasanna
Associate Professor
Department of Management
School of Business and Management
Kristu Jayanti Deemed to be University
Bengaluru

2. What is Management Accounting?
Management accounting is the process of preparing reports and
information for managers to help in planning, controlling, and decision-
making.
• Example: A manager uses cost reports to decide if a product should
continue or be stopped.

3. Evolution of Management Accounting
• Traditional Costing (focus on factory cost)
• Financial Accounting (external reporting)
• Emergence of Management Accounting (internal decision-making)
• Modern Tools: ABC costing, Balanced Scorecard, ERP systems
• Example: Earlier, firms only recorded costs. Now they analyze profit
centers, budgets, and strategic plans.

4. Objectives of Management Accounting
• Provide relevant information
• Help in budgeting & cost control
• Assist in internal financial decisions
• Increase operational efficiency
• Support strategic business planning

5. Nature of Management Accounting
• Decision-oriented
• Future-focused
• Internal use only
• Uses both financial and non-financial data
• Example: Analyzing customer satisfaction along with sales trends to
improve service.

6. Scope of Management Accounting
1.Cost Accounting
2.Budgeting & Forecasting
3.Financial Analysis
4.Performance Measurement
5.Decision-making tools
6.Strategic Planning
• Example: Using break-even analysis to plan a new product launch.

7. Functions of Management Accounting
1.Planning – Budget preparation
2.Controlling – Comparing actual vs. budgeted
3.Decision-making – Choosing best alternative
4.Organizing – Setting performance metrics
5.Communication – Sharing reports across departments
• Example: A sales report helps decide if a marketing campaign worked.

8. Advantages of Management Accounting
• Helps in better decision-making
• Assists in planning and budgeting
• Improves cost control and cost reduction
• Measures performance using reports and KPIs
• Supports long-term strategic planning
• Increases operational efficiency
• Improves coordination between departments
• Helps in financial control and cash flow management
• Provides relevant information for internal use
• Encourages goal-setting and target achievement

9. Limitations of Management Accounting
• Depends on financial data
• Estimates & assumptions involved
• Not standardized like financial accounting
• Costly to implement
• Resistance to change in traditional systems
• Example: A forecast might go wrong due to wrong assumptions.

10. Summary
• Management accounting supports internal decision-making.
• It evolved from simple cost tracking to strategic analysis.
• Though powerful, it has limitations due to subjectivity and cost.

11. Thank You