Management Accounting

2. Learning Outcomes
• Analyze how Management Accounting is
used for decision making

3. Meaning of
Management Accounting
• It is comprised of two words ‘Management’
and ‘Accounting’.
• It is the study of managerial aspect of
accounting.
• The emphasis of management accounting
is to redesign accounting in such a way
that it is helpful to the management in
formation of policy, control of execution
and appreciation of effectiveness.

4. Definition
Acc. to Institute of Cost & Works Accountant
of India,
“a system of collection and presentation of
relevant economic information relating to
an enterprise for planning, controlling and
decision making”.

5. Characteristics or Nature of
Management Accounting
• Providing accounting information
• Cause and effect analysis
• Use of special techniques and concepts
• Taking important decisions
• Achieving of objectives
• No fixed norms are followed
• Increase in efficiency
• Supplies information and not decisions
• Concerned with forecasting

6. Objectives of Mgt. Accounting
• Planning and policy formulation
• Helpful in controlling performance
• Helpful in Interpreting financial Information
• Motivating employees
• Helpful in decisions making
• Reporting to Management
• Helpful in co-ordination
• Tax Administration

7. Scope of Management Accounting
• Financial accounting
• Cost accounting
• Budgeting and forecasting
• Tax planning
• Reporting to management
• Cost control procedures
• Statistical tools
• Internal control and internal audit
• Financial analysis and interpretation
• Office services

8. Functions of Mgt. Accounting
• Planning and forecasting
• Financial analysis and interpretation
• Facilitates managerial control
• Communication
• Use of Qualitative Information
• Co-ordinating
• Helpful in taking Strategic Decisions
• Supplying info. To various levels of mgt.

9. Limitations
• Based on accounting information
• Lack of knowledge
• Not an Alternative to administration
• Top heavy structure
• Evolutionary stage
• Personal bias

12. Choose the correct Answer
The primary user of management
accounting information is a(n)
A. shareholder evaluating a stock
investment
B. bondholder
C. external regulator
D. the controller

13. • D

14. Assess the following statement and choose
the correct answer.
Financial accounting provides a historical
perspective, whereas management
accounting emphasizes
A. a current perspective
B. past transactions
C. reports to shareholders
D. the future

15. • D

16. Analyse the following statement which is
true of management accounting
information?
A. It co-ordinates product design, production, and
marketing decisions.
B. It focuses on documenting past business
actions of a firm.
C. It is prepared based on SEC rules and FASB
accounting principles.
D. It is prepared for shareholders.

17. • A

18. Compile the Following Statements in
context to Management Accounting
A. focuses on estimating future revenues, costs,
and other measures to forecast activities and
their results
B. provides information about the company as a
whole
C. provides information that is generally available
only on a quarterly or annual basis
D. reports information that has occurred in the
past that is verifiable and reliable

19. • A

20. Examine the correct statement.
Managers use management accounting
information to
A. ensure that financial statements are consistent with the
SEC rules
B. communicate a firm's financial position to investors,
banks, regulators, and other outside parties
C. communicate, develop, and implement strategies
D. help external users such as investors, banks,
regulators, and suppliers

21. • C