Management Accounting

1. Subject Name:
Management Accounting
Class: II BCOM C

2. MEANING
Management Accounting is concerned with
data collection from internal and external
sources, analyzing, processing, interpreting
and communicating the information for use
within the organization so that management
can more efficiently plan, take decisions and
control the organization .to understand the
concept more clearly, a definition can be the
best tool.

3. CIMA[UK] defines
DEFINITION
ManagementAccountingisan integralpart ofmanagementwhichis concerned
withidentifying,presenting, andinterpretinginformation used forthepurposeof
[1] Formulating strategy,
[2] Planning and controlling activities,
[3] Decision making,
[4] Optimizing the use of resource,
[5] Disclosure to shareholders and other external
entity;
[6] Disclosure to employees,
[7] Safeguarding assets’’.

4. Robert Anthony definition
“as being concerned with accounting of
information which is useful to management’’.
Management accounting uses information collected from
various sources such as financial accounting, economics,
statistics, operational research etc.

5. OBJECTIVES OF MANAGEMENT
ACCOUNTING
Objectives are often termed as
‘functions’ of management
accounting. Main functions /
objectives of management accounting
are being explained as under

6. Data and information provided by management accounting, helps
management /managers to forecast and prepare all kinds of plans, namely
long-term plans, medium term plans and short-term plans, basis on which
appropriate strategies can be formulated.
Planning:
We all know the importance of control in not only corporations but even
in our lives. Management accounting helps in building good control
through its versatile techniques such as standard costing, budgetary
control, control ratios and internal audit.
Controlling:

7. Without coordination, nothing can succeed. With the use of
carefully designed MIS system of management accounting, desired
coordination can be brought about in various business activities and
amongst all departments and units.
Coordinating:
Management accounting provides qualitative information which
helps in taking better decisions. Quality of goods, customers and
employees, legal judgments, opinion polls, logics are some of the
examples of qualitative information supplied and used by the
management accounting system for better management.
Qualitative information:

8. Management Accounting has several techniques such as ratio
analysis, cash flow statements, trends analysis etc. are some
of the examples of qualitative information supplied and used
by the management accounting system for better
management.
Financial analysis and interpretations:
MIS is a very important aspect of management accounting
which prepares reports for presentation to all levels of
management. This keeps the management abreast of all
developments in key areas of the organization and also
helps in taking right decisions for successfully running the
business.
Communication:

9. A decision can make an organization. Good, correct and timely decisions are critical to the success of
an organization. Management accounting techniques of decision making such as marginal costing,
differential costing, discounted cash flows, capital expenditure decisions etc. help in taking very
significant decisions such as pricing of product, make/ buy decision, continue/discontinue a product,
repair/ replace decision.
Decision Making:
Good tax policies can be made only when long term goals of an organization are
clear. Tax management experts rely on management reports for indulging in
formulation of tax policies
Tax Policies: