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Scope of Management Accounting

Management accounting is concerned with rearranging financial accounting information, cost accounting techniques for determining product and service costs, financial management of planning and controlling resources, budgetary control including creating and comparing budgets to actuals, inventory control, reporting organizational performance to management through graphs and diagrams, interpreting financial statements, establishing internal controls and internal auditing, and complying with tax laws.

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6K views2 pages

Scope of Management Accounting

Management accounting is concerned with rearranging financial accounting information, cost accounting techniques for determining product and service costs, financial management of planning and controlling resources, budgetary control including creating and comparing budgets to actuals, inventory control, reporting organizational performance to management through graphs and diagrams, interpreting financial statements, establishing internal controls and internal auditing, and complying with tax laws.

Uploaded by

baba3674
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Scope of Management accounting

1)Financial Accounting: Management accounting is mainly concerned with the rearrangement of the information provided by financial accounting. Hence, management cannot obtain full control and coordination of operations without a properly designed financial accounting system. 2) Cost Accounting: Cost accounting provides various techniques for determining cost of manufacturing products or cost of providing service. The systems of standard costing, marginal costing, opportunity cost analysis and differential costing are all helpful to the management for planning and controlling various business activities. 3)Financial management: It is concerned with the planning and controlling of financial resources of the firm. It deals with the raising of funds and their effective utilization. 4)Budgetary Control: This includes framing of budgets, comparison of actual performance with the budgeted performance, computation of variances, finding of their causes, etc. 5) Inventory Control: It includes control over inventory from the time it is acquired till its final disposal. Inventory control is significant as it involves large sums. 6)Reporting to management: Management accountant reports the management about various activities of the concern in order to control the organizational performance. The reports are presented in the form of graphs, diagrams, etc. 7)Interpretation of data: The management accountant interprets various financial statements to the management. These statements give an idea about the financial and earning position of the concern.

8) Internal Audit: It needs devising a system of internal control by establishing internal audit coverage for all operating units. It helps the management to fix responsibilities to individuals. 9) Tax Accounting: This includes computation of income in accordance with the tax laws, filing of returns and making tax payments. The management is informed about tax burden from central government, state governments and local authorities.

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