This document outlines a management accounting course. The course will cover four units: introduction to management, financial, cost, and managerial accounting; budgetary control and variances; costing and profit planning; and managerial decision making. Key topics include comparative financial statements, ratio analysis, budget preparation and variance analysis, cost-volume-profit analysis, and using accounting information for decisions around product mix and make-or-buy analysis. The course will utilize lectures, case studies, presentations, exercises and a project. It aims to help students understand how managerial accounting can assist management functions like planning, organizing and controlling through tools like standard costing, budgeting and qualitative analysis.
Management accounting provides financial information for internal use in planning, decision-making, and control. It helps managers identify inefficient areas, forecast future performance, and determine costs. In contrast to financial accounting which has fixed rules, management accounting tools may differ between organizations. While it provides information, management accounting does not make decisions - that responsibility remains with management. Some key functions include margin analysis, breakeven analysis, constraint analysis, and target costing. Limitations include reliance on financial/cost accounting data and lack of knowledge in related fields. Management accounting is an evolving system that aids strategic decision-making through tools like ratio analysis, budgets, forecasts, and variance analysis.
Management accounting provides financial and non-financial information to managers for decision making. It involves partnering with management in strategic planning, performance management, and financial reporting to help implement organizational strategy. Management accounting draws information from accounting and non-accounting sources to provide quantitative and qualitative data for management planning and control. It covers areas like financial accounting, cost accounting, statistical methods, operations research, taxation, and organization and methods.
The document discusses managerial accounting information systems. It acknowledges those who helped with the project and thanks Allah. It provides an abstract that accounting identifies, records, and communicates relevant and reliable information to users. Management accounting differs from financial accounting in its users. The document includes sections on introduction and scope, management accounting, functions and goals of management accounting, benefits and limitations. It concludes that applying an accounting system, including management accounting, can help enterprises achieve objectives by providing useful information. It provides references used.
Management accounting is a recent term that was coined in the 1950s to describe accounting as an effective management tool. [1] It involves techniques like budgeting, standard costing, and analyzing performance to provide information to assist management with planning, control, and decision making. [2] The objectives of management accounting are to compile plans and budgets, allocate responsibilities, analyze transactions, and present up-to-date financial information to help management evaluate performance and plan for the future. [3] Its scope encompasses financial accounting, cost accounting, budgeting, cost control, statistical analysis, and other areas that provide tools to help managers increase productivity.
This document provides the syllabus for a Principles of Managerial Accounting course. The syllabus outlines topics that will be covered, including the fundamentals of managerial accounting, analysis and interpretation of financial statements, ratio analysis, cost-volume-profit analysis, and assessment criteria. Key concepts such as the distinction between managerial and financial accounting, and managerial and cost accounting will be examined. The course will be assessed through assignments, quizzes, examinations, presentations, and a final examination.
Management accounting provides essential financial information and analysis to management for planning, decision-making, and controlling business operations. It includes collecting and reporting data on cost accounting, budgeting, financial performance, taxation, and internal controls. The management accountant modifies and presents this information in a way that helps management evaluate alternatives, communicate goals to different departments, monitor performance, and take corrective actions to maximize profits.
Management accounting involves partnering with management in decision making, planning, and performance management. It has evolved from traditional cost accounting to also include strategic management, performance management, and risk management. Management accountants analyze financial data and costs, prepare budgets and forecasts, report to management, and perform tasks like cost control, internal auditing, and tax planning to assist managers in making informed decisions. Specific methodologies used include activity-based costing, standard cost accounting, and transfer pricing.
Management accounting provides accounting information to assist management in planning, controlling, and decision-making. It focuses on the future and internal reporting needs of management rather than the past and external reporting emphasized in financial accounting. Management accounting uses both financial and non-financial quantitative and qualitative data accumulated from financial and cost accounting systems. It involves tasks like financial statement analysis, cash flow analysis, budgeting, variance analysis, and generating customized reports to meet the specific information needs of management for decision-making.
Management accounting provides financial information for internal use in planning, decision-making, and control. It helps managers identify inefficient areas, forecast future performance, and determine costs. In contrast to financial accounting which has fixed rules, management accounting tools may differ between organizations. While it provides information, management accounting does not make decisions - that responsibility remains with management. Some key functions include margin analysis, breakeven analysis, constraint analysis, and target costing. Limitations include reliance on financial/cost accounting data and lack of knowledge in related fields. Management accounting is an evolving system that aids strategic decision-making through tools like ratio analysis, budgets, forecasts, and variance analysis.
Management accounting provides financial and non-financial information to managers for decision making. It involves partnering with management in strategic planning, performance management, and financial reporting to help implement organizational strategy. Management accounting draws information from accounting and non-accounting sources to provide quantitative and qualitative data for management planning and control. It covers areas like financial accounting, cost accounting, statistical methods, operations research, taxation, and organization and methods.
The document discusses managerial accounting information systems. It acknowledges those who helped with the project and thanks Allah. It provides an abstract that accounting identifies, records, and communicates relevant and reliable information to users. Management accounting differs from financial accounting in its users. The document includes sections on introduction and scope, management accounting, functions and goals of management accounting, benefits and limitations. It concludes that applying an accounting system, including management accounting, can help enterprises achieve objectives by providing useful information. It provides references used.
Management accounting is a recent term that was coined in the 1950s to describe accounting as an effective management tool. [1] It involves techniques like budgeting, standard costing, and analyzing performance to provide information to assist management with planning, control, and decision making. [2] The objectives of management accounting are to compile plans and budgets, allocate responsibilities, analyze transactions, and present up-to-date financial information to help management evaluate performance and plan for the future. [3] Its scope encompasses financial accounting, cost accounting, budgeting, cost control, statistical analysis, and other areas that provide tools to help managers increase productivity.
This document provides the syllabus for a Principles of Managerial Accounting course. The syllabus outlines topics that will be covered, including the fundamentals of managerial accounting, analysis and interpretation of financial statements, ratio analysis, cost-volume-profit analysis, and assessment criteria. Key concepts such as the distinction between managerial and financial accounting, and managerial and cost accounting will be examined. The course will be assessed through assignments, quizzes, examinations, presentations, and a final examination.
Management accounting provides essential financial information and analysis to management for planning, decision-making, and controlling business operations. It includes collecting and reporting data on cost accounting, budgeting, financial performance, taxation, and internal controls. The management accountant modifies and presents this information in a way that helps management evaluate alternatives, communicate goals to different departments, monitor performance, and take corrective actions to maximize profits.
Management accounting involves partnering with management in decision making, planning, and performance management. It has evolved from traditional cost accounting to also include strategic management, performance management, and risk management. Management accountants analyze financial data and costs, prepare budgets and forecasts, report to management, and perform tasks like cost control, internal auditing, and tax planning to assist managers in making informed decisions. Specific methodologies used include activity-based costing, standard cost accounting, and transfer pricing.
Management accounting provides accounting information to assist management in planning, controlling, and decision-making. It focuses on the future and internal reporting needs of management rather than the past and external reporting emphasized in financial accounting. Management accounting uses both financial and non-financial quantitative and qualitative data accumulated from financial and cost accounting systems. It involves tasks like financial statement analysis, cash flow analysis, budgeting, variance analysis, and generating customized reports to meet the specific information needs of management for decision-making.
In ordinary language any system of accounting, which assists management in carrying out its functions more efficiently may be termed as management accounting. The Institute of Chartered Accountants of England and Wales has stated that “any form of accounting, which enables a business to be conducted more efficiently can be regarded as Management Accounting.”
This document defines management accounting and outlines its key characteristics and objectives. Management accounting is the study of accounting from a managerial perspective, focusing on providing relevant economic information to management for planning, controlling, and decision making. It has objectives like planning and policy formulation, controlling performance, decision making, and reporting to management. The primary user of management accounting information is the controller.
advantages of management account,definition,functions of management account,limitations of management account,management account,meaning,nature of management account,objectives of account,scope of management account
Accounting has existed for centuries and developed over time. Management accounting evolved to provide accounting information tailored to management's needs for decision making, planning, and control. It utilizes techniques like budgeting and standard costing. While valuable for management, management accounting relies on other accounting systems and human judgment, so it has limitations. Overall, it aims to improve organizational efficiency and profitability through informed managerial actions.
Management accounting provides information to assist managers in planning, directing operations, and controlling the organization. It involves recording, analyzing, and reporting financial and operational data to help managers make informed business decisions. The management accountant's role is to identify, measure, analyze, interpret, and communicate financial and non-financial information relevant for decision-making, planning, and control. Key tools used include budgets, variance analysis, costing techniques, and reports to help managers with tasks like setting objectives, allocating resources, and evaluating performance.
Management accounting provides internal accounting information to managers to aid strategic decision-making. It focuses on forward-looking reports to help plan and control operations. Management accounting differs from financial accounting which produces external reports for stakeholders on historical performance and financial position. The key principles of management accounting are causality, which provides cause-and-effect insights, and analogy, which allows managers to apply insights to their own activities and decisions. Management accounting aims to serve managers' decision-making needs rather than just complying with financial reporting requirements.
Management accounting provides financial information to internal managers to assist with decision making and management functions. It focuses on forward-looking reports to help plan for the future, while financial accounting provides external historical reports. The key differences are that management accounting is internal/future-focused while financial accounting is external/historical. Management accounting follows principles of causality and analogy to provide insights for managing business activities.
This document provides an introduction to management accounting. It discusses the evolution of accounting from ancient times to the modern era. It defines financial accounting, cost accounting, and management accounting. Financial accounting records and reports historical financial data externally, while management accounting provides forward-looking analysis and non-financial data internally to support decision making. Key differences between financial and management accounting are that management accounting focuses on performance analysis, future projections, non-monetary factors, and precision is less important than usefulness for managers.
This document discusses the functions of a financial controller. It begins by explaining how management accounting has evolved and led to the segregation of accounting functions from other secretarial and financial activities. This allows for more accurate accounting control over complex business operations. As a result, the role of a financial controller has emerged. The controller is a skilled business analyst, qualified through training and experience, to perform several key functions:
1. Overseeing the establishment and maintenance of an adequate system of internal control.
2. Preparing budgets and assisting management in comparing actual performance to budgets to aid decision making.
3. Analyzing variances and reporting on them to management.
In short, the financial controller is
Managerial accounting provides internal reports and analyses to help management make decisions regarding business performance. It uses techniques like marginal analysis, constraint analysis, and capital budgeting to aid planning, organizing, directing, and controlling. While dependent on accurate financial records, managerial accounting helps analyze costs, trends, and forecasts to set goals, compare departments, and maximize profits. However, different managers may interpret information differently, and it is best suited for larger, established companies that can implement specialized systems.
Managerial accounting provides internal managers and external parties with financial and non-financial information to make informed business decisions. It involves tracking costs and revenues, preparing budgets and forecasts, and analyzing variances. An effective accounting system balances costs with benefits, adheres to regulatory standards, and considers behavioral implications on managers. Budgets and performance reports are key tools that facilitate planning, control, and evaluation of business activities. Accountants play an important role across an organization's value chain functions from research to customer service.
To assist the management in promoting efficiency. Efficiency includes best possible services to customers, investors and employees.
To prepare budgets covering all functions of a business (i.e, production, sales, research and finance).
To analyze monetary and non-monetary transactions.
To compare the actual performance with plan for identifying deviations and their causes.
To interpret financial statement to enable the management to formulate future policies.
To submit to the management at frequent intervals operating statements and short term financial statements.
To arrange for the systematic allocation of responsibilities.
To provide a suitable organization for discharging the responsibilities.
This document provides an overview of management accounting and establishing a management accounting information system. It defines management accounting as accounting methods that assist management in maximizing profits through special techniques like budgeting and variance analysis. It also outlines the key steps to establishing an effective management accounting information system, including identifying information needs, searching for appropriate computerized solutions, developing an implementation plan, and ensuring the system is utilized to its full potential. The overall goal is to provide timely, accurate information to managers to help with planning, controlling costs, and decision-making.
This document discusses management accounting. It defines management accounting as using accounting data to assist management with policymaking, planning, control, and decision-making. The objectives of management accounting include better planning, promoting efficiency, budget preparation, analyzing transactions, and interpreting financial statements. Management accounting is selective in the data it presents, provides data but not decisions, is concerned with the future, and analyzes different variables without set formats. Its merits include measuring performance versus budgets and improving efficiency and relations. Its limitations include relying on other accounting areas and requiring knowledgeable management and large organizations.
1. The document provides an introduction to management accounting, discussing its development and differences from financial accounting.
2. Management accounting aims to provide quantitative information to internal management for planning, controlling and decision making, while financial accounting reports to external stakeholders on the overall financial performance and position of a business.
3. Key differences include management accounting having a broader scope beyond monetary transactions, focusing on performance analysis, non-financial factors, and future projections to support internal management needs.
Management accounting is an internal accounting system designed to support managers' information needs. It focuses on providing information for costing products and services, continuous improvement, planning, evaluation, controlling, and decision making. Management accounting is not bound by GAAP and produces both financial and non-financial information for internal users such as management. It emphasizes future events and performance at the entity, department, and manager level. Current focuses of management accounting include activity-based management, customer orientation, strategic positioning, value chain analysis, quality management, and a cross-functional perspective. The role of management accountants is one of support to staff functions like production, finance, and internal audit.
Intoduction to management accounting (MAF251)Ismail Noordin
- Management accounting and financial accounting both involve decision making, record keeping and performance evaluation functions. They are both based on the principle of stewardship to be responsible and accountable for financial and operating performance.
- They use the same general accounting system to collect data and develop information. However, management accounting focuses more on internal reporting to help managers with decision making, while financial accounting focuses on external reporting for stakeholders.
- Some key similarities include using the same data collection system and providing information to fulfill accountability of financial and operating performance. However, management accounting reports are more flexible and focus on segments useful for decision making.
Managerial accounting provides economic and financial information to internal managers to aid in planning, directing, and controlling operations. It involves calculating costs, analyzing cost-volume relationships, accumulating relevant data for decision making, determining prices, assisting with budgeting, and providing controls. Managerial accounting applies to all types of businesses and aids managers in their key functions of planning, directing, and controlling. It differs from financial accounting in its internal focus and special-purpose information. Modern trends include a shift to services, new costing methods like activity-based costing, just-in-time inventory, and lean manufacturing.
In ordinary language any system of accounting, which assists management in carrying out its functions more efficiently may be termed as management accounting. The Institute of Chartered Accountants of England and Wales has stated that “any form of accounting, which enables a business to be conducted more efficiently can be regarded as Management Accounting.”
This document defines management accounting and outlines its key characteristics and objectives. Management accounting is the study of accounting from a managerial perspective, focusing on providing relevant economic information to management for planning, controlling, and decision making. It has objectives like planning and policy formulation, controlling performance, decision making, and reporting to management. The primary user of management accounting information is the controller.
advantages of management account,definition,functions of management account,limitations of management account,management account,meaning,nature of management account,objectives of account,scope of management account
Accounting has existed for centuries and developed over time. Management accounting evolved to provide accounting information tailored to management's needs for decision making, planning, and control. It utilizes techniques like budgeting and standard costing. While valuable for management, management accounting relies on other accounting systems and human judgment, so it has limitations. Overall, it aims to improve organizational efficiency and profitability through informed managerial actions.
Management accounting provides information to assist managers in planning, directing operations, and controlling the organization. It involves recording, analyzing, and reporting financial and operational data to help managers make informed business decisions. The management accountant's role is to identify, measure, analyze, interpret, and communicate financial and non-financial information relevant for decision-making, planning, and control. Key tools used include budgets, variance analysis, costing techniques, and reports to help managers with tasks like setting objectives, allocating resources, and evaluating performance.
Management accounting provides internal accounting information to managers to aid strategic decision-making. It focuses on forward-looking reports to help plan and control operations. Management accounting differs from financial accounting which produces external reports for stakeholders on historical performance and financial position. The key principles of management accounting are causality, which provides cause-and-effect insights, and analogy, which allows managers to apply insights to their own activities and decisions. Management accounting aims to serve managers' decision-making needs rather than just complying with financial reporting requirements.
Management accounting provides financial information to internal managers to assist with decision making and management functions. It focuses on forward-looking reports to help plan for the future, while financial accounting provides external historical reports. The key differences are that management accounting is internal/future-focused while financial accounting is external/historical. Management accounting follows principles of causality and analogy to provide insights for managing business activities.
This document provides an introduction to management accounting. It discusses the evolution of accounting from ancient times to the modern era. It defines financial accounting, cost accounting, and management accounting. Financial accounting records and reports historical financial data externally, while management accounting provides forward-looking analysis and non-financial data internally to support decision making. Key differences between financial and management accounting are that management accounting focuses on performance analysis, future projections, non-monetary factors, and precision is less important than usefulness for managers.
This document discusses the functions of a financial controller. It begins by explaining how management accounting has evolved and led to the segregation of accounting functions from other secretarial and financial activities. This allows for more accurate accounting control over complex business operations. As a result, the role of a financial controller has emerged. The controller is a skilled business analyst, qualified through training and experience, to perform several key functions:
1. Overseeing the establishment and maintenance of an adequate system of internal control.
2. Preparing budgets and assisting management in comparing actual performance to budgets to aid decision making.
3. Analyzing variances and reporting on them to management.
In short, the financial controller is
Managerial accounting provides internal reports and analyses to help management make decisions regarding business performance. It uses techniques like marginal analysis, constraint analysis, and capital budgeting to aid planning, organizing, directing, and controlling. While dependent on accurate financial records, managerial accounting helps analyze costs, trends, and forecasts to set goals, compare departments, and maximize profits. However, different managers may interpret information differently, and it is best suited for larger, established companies that can implement specialized systems.
Managerial accounting provides internal managers and external parties with financial and non-financial information to make informed business decisions. It involves tracking costs and revenues, preparing budgets and forecasts, and analyzing variances. An effective accounting system balances costs with benefits, adheres to regulatory standards, and considers behavioral implications on managers. Budgets and performance reports are key tools that facilitate planning, control, and evaluation of business activities. Accountants play an important role across an organization's value chain functions from research to customer service.
To assist the management in promoting efficiency. Efficiency includes best possible services to customers, investors and employees.
To prepare budgets covering all functions of a business (i.e, production, sales, research and finance).
To analyze monetary and non-monetary transactions.
To compare the actual performance with plan for identifying deviations and their causes.
To interpret financial statement to enable the management to formulate future policies.
To submit to the management at frequent intervals operating statements and short term financial statements.
To arrange for the systematic allocation of responsibilities.
To provide a suitable organization for discharging the responsibilities.
This document provides an overview of management accounting and establishing a management accounting information system. It defines management accounting as accounting methods that assist management in maximizing profits through special techniques like budgeting and variance analysis. It also outlines the key steps to establishing an effective management accounting information system, including identifying information needs, searching for appropriate computerized solutions, developing an implementation plan, and ensuring the system is utilized to its full potential. The overall goal is to provide timely, accurate information to managers to help with planning, controlling costs, and decision-making.
This document discusses management accounting. It defines management accounting as using accounting data to assist management with policymaking, planning, control, and decision-making. The objectives of management accounting include better planning, promoting efficiency, budget preparation, analyzing transactions, and interpreting financial statements. Management accounting is selective in the data it presents, provides data but not decisions, is concerned with the future, and analyzes different variables without set formats. Its merits include measuring performance versus budgets and improving efficiency and relations. Its limitations include relying on other accounting areas and requiring knowledgeable management and large organizations.
1. The document provides an introduction to management accounting, discussing its development and differences from financial accounting.
2. Management accounting aims to provide quantitative information to internal management for planning, controlling and decision making, while financial accounting reports to external stakeholders on the overall financial performance and position of a business.
3. Key differences include management accounting having a broader scope beyond monetary transactions, focusing on performance analysis, non-financial factors, and future projections to support internal management needs.
Management accounting is an internal accounting system designed to support managers' information needs. It focuses on providing information for costing products and services, continuous improvement, planning, evaluation, controlling, and decision making. Management accounting is not bound by GAAP and produces both financial and non-financial information for internal users such as management. It emphasizes future events and performance at the entity, department, and manager level. Current focuses of management accounting include activity-based management, customer orientation, strategic positioning, value chain analysis, quality management, and a cross-functional perspective. The role of management accountants is one of support to staff functions like production, finance, and internal audit.
Intoduction to management accounting (MAF251)Ismail Noordin
- Management accounting and financial accounting both involve decision making, record keeping and performance evaluation functions. They are both based on the principle of stewardship to be responsible and accountable for financial and operating performance.
- They use the same general accounting system to collect data and develop information. However, management accounting focuses more on internal reporting to help managers with decision making, while financial accounting focuses on external reporting for stakeholders.
- Some key similarities include using the same data collection system and providing information to fulfill accountability of financial and operating performance. However, management accounting reports are more flexible and focus on segments useful for decision making.
Managerial accounting provides economic and financial information to internal managers to aid in planning, directing, and controlling operations. It involves calculating costs, analyzing cost-volume relationships, accumulating relevant data for decision making, determining prices, assisting with budgeting, and providing controls. Managerial accounting applies to all types of businesses and aids managers in their key functions of planning, directing, and controlling. It differs from financial accounting in its internal focus and special-purpose information. Modern trends include a shift to services, new costing methods like activity-based costing, just-in-time inventory, and lean manufacturing.
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1. Management Accounting
Course Code - BBA - 207
Associate Professor
Dr. Reema Sharma
Department of Management Sciences
Tecnia Institute of Advanced Studies
2. What are we going to discuss?
Unit 1:
• Introduction: Meaning, Objectives, and Scope of management
accounting; Difference between financial accounting, cost accounting
and management accounting; Comparative financial statements,
common size financial statements, trend analysis, Ratio analysis, cash
flow statement.
Unit 2:
• Budgetary Control and Variances: Concept and types of budgeting
and budgetary control; meaning, objectives, merits, and limitations
of budgetary control; budget administration; Functional budgets
including cash budget; Fixed and flexible budgets: meaning and
preparation; Zero-based budgeting; Performance budgeting,
difference between performance & traditional budgeting. Meaning
of Variance and Variance Analysis – Material, Labour, Overheads and
Sales Variances, Disposition of Variances, Control Ratios. . 2
3. •Unit 3: (14 Hours) Costing and Profit Planning:
Meaning of Variable Costing, Absorption Costing
and Marginal Costing; uses of Marginal costing;
Cost-Volume-Profit Analysis, Profit/Volume ratio,
Break-Even Analysis - Algebraic And Graphic
Methods, Angle of Incidence and Margin of Safety.
•Unit 4: (14 Hours) Managerial Decision
Making:Decision making based on Marginal Cost
Analysis - profitable product mix, Make or Buy,
Addition or Elimination of a product line, sell or
process further, operate or shut down Managerial
Decision-making using spreadsheets.
3
4. Activities
• Lectures
• Case studies discussions
• Presentations
• Numerical
• Quiz
• Project Work
• Video Lectures
4
6. Reference Books
• Bhattacharya, Management Accounting, Pearson Education.
• Hilton R. W., Managerial Accounting, McGraw Hill Education
6
7. Unit - 1
What is Management Accounting?
Accounting for Planning, Control, and
Evaluation
8. Key Learning Objectives
• Discuss the differences between
financial, cost and management
accounting.
• Describe modern management
trends changing the role of
accounting in organizations.
• Understand managerial accountants’
professional environment.
• Define the four types of accounting
systems and relate them to their four
organizational roles.
• Understand how managers can use
accounting information to
implement strategies.
9. Why Do We Have Accounting Systems?
• Accounting systems are artifacts. They are created by men
to help accomplish tasks. Audited statement reduce
investors risk.
• Audited statements allow a company to borrow capital from
someone else.
• Records and internal financial controls safeguard the company’s
assets
• Balance Sheets allow the comparison of Assets, Liabilities and
Owner’s Equity.
• Income Statements describe the change in Owners’ Equity from
operations.
10. Needs Determine the Form of Accounting Data
• Managers need changing information to meet changing needs!
• Types of Accounting Systems
• Financial Accounting
• Rules and procedures
• Accounting information systems and internal controls
• Auditing
• Cost Accounting
• Product costing
• Activity-based costing
11. • Management Accounting
• Decision support
• Organizational control
• Cost management
• Profit management
• Investment management
• Tax Accounting
• Individuals
• Partnerships and corporations
• Estate and trusts
• International taxation
• Special tax issues and topics
12. • Regulated Accounting Systems
• Financial Accounting or Generally Accepted Accounting Principles
(GAAP). Provide the basis for traditional accounting information
systems and internal controls.
• Tax Accounting. This is the collection of data to meet rules set by
Congress and enforced by the Internal Revenue Service (IRS).
• Fund Accounting. An accounting system designed to provide
governance information for government agencies and not-for-profit
organizations.
• Cost Accounting. This aspect of cost accounting is to comply with
rules set by the Federal government for government contractors.
Rules set by the Cost Accounting Standards Board (CASB).
13. The Three Management Functions
• Questions asked:
• What do I want to do?
• How can I do it?
• Am I getting it done?
• How well did I do it?
• Management functions:
• Planning for the future
(Strategic)
• Planning for the future
(Operational)
• Monitoring and controlling
the present
• Evaluating the past
15. How Managerial Accounting Works
• Managerial accounting encompasses many facets of
accounting aimed at improving the quality of information
delivered to management about business operation metrics.
Managerial accountants use information relating to the cost
and sales revenue of goods and services generated by the
company. Cost accounting is a large subset of managerial
accounting that specifically focuses on capturing a
company's total costs of production by assessing the variable
costs of each step of production, as well as fixed costs. It
allows businesses to identify and reduce unnecessary
spending and maximize profits.
15
16. New Management Trends to Create Value
• Encourage Management Accounting Systems Redesign, for
example.
• Customer focus
• Quality focus
• Delivery focus
• Outsourcing and the virtual company
• Communications
• Shortening product life cycles
• Team development
• Deregulation in the service sector
17. Managerial Accounting Systems: Unregulated
• Decision Support — Management accounting data has
value if it improves management decisions.
• Control Support — Management accounting data reports
the results of management actions, thus it is useful for
control if management behavior is influenced by the
accounting reports.
WHAT GETS MEASURED GETS DONE!
SUITABLE CONTROL MOTIVATES GOOD JUDGEMENT
GOOD JUDGMENT REQUIRES GOOD INFORMATION!
18. The Professional Management Accountant
• Professional Certifications
• Certified Public Accountant (CPA)
• Certified Management Accountant (CMA)
• Certified Internal Auditor (CIA)
• Certified Information Systems Auditor (CISA)
• Certified in Financial Management (CFM)
• Chartered Accountant (CA)
20. Objective of Management Accounting
•The main objective of management accounting is to
assist the management of a company in efficiently
performing its functions:
•Planning
•Organizing
•Directing
•Controlling.
Management accounting helps with these functions in
the following ways:
20
21. • 1. Provides data: It serves as a vital source of data for planning.
The historical data captured by managerial accounting shows the
growth of the business, which is useful in forecasting.
• 2. Analyzes data: The accounting data is presented in a meaningful
way by calculating ratios and projecting trends. This information is
then analyzed for planning and decision-making. For example, you
can categories purchase of different items period-wise, supplier-wise
and territory wise.
• 3. Aids meaningful discussions: Management accounting can be used
as a means of communicating a course of action throughout the
organization. In the initial stages, it depicts the organisational
feasibility and consistency of various segments of a plan. Later, it tells
about the progress of the plans and the roles of different parties to
implement it.
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22. •4. Helps in achieving goals: It helps convert
organizational strategies and objectives into feasible
business goals. These goals can be achieved by
imposing budget control and standard costing,
which are integral parts of management accounting.
•5. Uses qualitative information: Management
accounting does not restrict itself to quantitative
information for decision-making. It takes into
account qualitative information which cannot be
measured in terms of money. Industry cycles,
strength of research and development are some of
the examples qualitative information that a
business can collect using special surveys.
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23. Scope of Management Accounting
• Its scope is quite vast and includes several business
operations. The following points discuss what management
accounting can do to make a business run better.
• 1. Managerial accounting is a rearrangement of information
on financial statements and depends on it for making
decisions. So the management cannot enforce the
managerial decisions without referring to a concrete
financial accounting system.
• 2. What you can infer from financial accounting is limited
to numerical results like profit and loss, but in management
accounting you can discuss the cause and effect
relationships behind those results.
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24. •3. Managerial accounting uses easy-to-understand
techniques such as standard costing, marginal
costing, project appraisal, and control accounting.
•4. Using historical data as a reference, the
management observes the current information to
check the impacts of business decisions.
•5. Management can use this type of accounting to
set objectives, format plans to meet them, and
compare the performance of various departments.
•6. Managerial accounting is used for forecasting. It
concentrates on supplying information that would
ease the effect of a problem rather than arriving at
a final solution.
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