Management accounting is not a specific system of accounting.

It could be any form

of accounting which enables a business to be conducted more effectively and efficiently. It is largely concerned
with providing economic information to mangersfor achieving organizational goals. It is an extension of the
horizon of cost accounting towards newer areas of management. Much management accounting information is
financial in nature but has been organized in a manner relating directly to the decision on hand. Management
Accounting is comprised of two words ‘Management’ and ‘Accounting’. It means 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.

Cost Accounting Management Accounting

The main objective of cost accounting is to assist The primary objective of management accounting is to
the management in cost control and decision- provide necessary information to the management in
making. the process of its planning, controlling, and
performance evaluation, and decision-making.

Cost accounting system uses quantitative cost Management accounting uses both quantitative and
data that can be measured in monitory terms. qualitative data. It also uses those data that cannot be
measured in terms of money.

Determination of cost and cost control are the Efficient and effective performance of a concern is the
primary roles of cost accounting. primary role of management accounting.

Success of cost accounting does not depend Success of management accounting depends on
upon management accounting system. sound financial accounting system and cost accounting
systems of a concern.

Cost-related data as obtained from financial Management accounting is based on the data as
accounting is the base of cost accounting. received from financial accounting and cost accounting.

Provides future cost-related decisions based on Provides historical and predictive information for future
the historical cost information. decision-making.

Cost accounting reports are useful to the Management accounting prepares reports exclusively
management as well as the shareholders and meant for the management.
creditors of a concern.

Only cost accounting principles are used in it. Principals of cost accounting and financial accounting
are used in management accounting.

Statutory audit of cost accounting reports are No statutory requirement of audit for reports.
necessary in some cases, especially big
business houses.

Cost accounting is restricted to cost-related data. Management accounting uses financial accounting
data as well as cost accounting data.

Budgetary control is the process of determining various actual results with budgeted figures for the enterprise for
the future period and standards set then comparing the budgeted figures with the actual performance for
calculating variances, if any. First of all, budgets are prepared and then actual results are recorded.
The comparison of budgeted and actual figures will enable the management to find out discrepancies and take
remedial measures at a proper time. The budgetary control is a continuous process which helps in planning and
co-ordination. It provides a method of control too. A budget is a means and budgetary control is the end-result.
Master budget -A master budget is an aggregation of lower-level budgets created by the different functional
areas in an organization. It uses inputs from financial statements, the cash forecast, and the financial plan.
Operating budget- An operating budget shows a business’s projected revenue and the expenses associated
with it for a period of time. It’s very similar to a profit and loss report.
Cash budget- A cash flow budget gives you an estimate of the money that comes in or goes out of a business
for a specific period in time. 
Financial budget- Businesses draft this budget to understand how much capital they’ll need and at what times
for fulfilling short-term and long-term needs
Static budget -As the name suggests, this budget is an estimate of revenue and expenses that will remain fixed
throughout the year. The line items in this budget can be used as goals to meet regardless of any increases or
decreases in sales.
Ideal costing =A high-quality cost accounting system in one that achieves the objectives of costing in the best
possible way and brings benefits to the business. An ideal system of costing should possess the following
characteristics:1. Simplicity=The costing system should be simple to operate and easy to understand. The facts,
figures, and other information revealed by cost accounts should be presented in a way that makes them easy to
grasp. As such, the needless elaboration of costing records should be avoided.2. Suitability to the
Business=The costing system should be devised so as to suit the conditions, requirements, nature, and size of
the business. A costing system that serves the enterprise’s purposes and supplies necessary information for
running the business is an ideal system for that business.3. Economy=For the costing system to become a
profitable investment for the business, the cost of installing and operating the system must be within the
organization’s financial capacity.4. Elasticity=The costing system should be elastic and capable of adapting to
changing conditions. As such, it must not be rigid. It should, in particular, be capable of handling a large volume
of work and also dealing with changes in the nature of business.5. Accuracy=The costing system should ensure
the accuracy of the records that are maintained. If the costing records maintained are not correct or accurate, the
results or conclusions drawn from them are bound to be inaccurate and misleading.

Operation costing helps businesses account for the total cost of each operation, which allows accounting
professionals to better understand and control costs. Companies often try to decrease the operating costs to their
most profitable level while maintaining reliable and efficient production. Operating costs that are too high might
lead to a company pricing its product above market value to compensate, so this method can help companies
maximize their profits. It's useful in situations where products have a mixture of unique and broad production
procedures, so companies that produce both mass and personalized goods may benefit from this method.

Responsibility accounting is a kind of management accounting that is accountable for all the management,
budgeting, and internal accounting of a company. The primary objective of this accounting is to support all the
Planning, costing, and responsibility centres of a company.
The accounting generally includes the preparation of a monthly and annual budget for an individual responsibility
centre. It also accounts for the cost and revenue of a company, where reports are accumulated monthly or
annually and reported to the concerned manager for the feedback. Responsibility accounting mainly focuses on
responsibilities centres.
For instance, if Mr X, the manager of a unit, plans the budget of his department, he is responsible for keeping the
budget under control. Mr X will have all the required information about the cost of his department. In case, if the
expenditure is more than the allocated budget than Mr X will try to find the error and take necessary action and
measures to correct it. Mr X will be personally accountable for the performance of his unit.
various approached of responsibility accounting are as follow
 Cost (or Expense) Centre
 Revenue Centre
 Profit Centre
 Contribution Centre
 Investment Centre

Ideal costing
Flexibility -Another important requirement is that the costing system must be flexible. An organization functions in a
very dynamic environment, so it has to change according to these variations.This means the costing system should
also be flexible to adjust to all these variations and changes.
Economical -The entire point of a costing system is to provide cost information to the management so they can
practice cost control. If the cost system itself is too expensive it defeats the purpose. The benefit gained from the
costing system must outweigh the cost to run and maintain the system.
Comparability -The ideal costing system provides the management of the organization with the facts and data in
such a way, that it can be compared with the data from the previous year and also with the data of other
organizations of the same industry. This comparison helps the management evaluate the performance of the
organization, hence it is an important aspect.
Timely -The costing system should provide management with accurate information when desired by them. So the
data must be provided quickly and in a timely manner for it to be most effective.
Minimum Effort -An ideal costing system can be set up with minimum effort and changes to the existing set
up of the organization. If the set up is extensive it will be a waste of time and money.
 Trading Concerns: Non-trading Concerns

The main objective is to earn profit The main objective is to provide goods and

services that fulfill a social need.

The primary sources of income are The primary sources of income are entrance fees,
merchandise sales and services rendered to others subscriptions, donations, the government,
municipal grants, and so on
The net income or profit earned during a trading The excess of income over expenditure is not
period is distributed among the partners or distributed but is used to fulfill the requirements of
shareholders. the concerns.

These may take the form of a sole These may take the form of a club, society,
proprietorship, partnership, joint-stock company, or association, or trust
public enterprise.

Ownership lies in the hands of the persons Ownership does not lie in the hands of anyone.
who contributed capital. In a sole proprietorship, All the persons carrying on the society, club, or
the proprietor is the owner, whereas in partnerships trust are its members.
and joint-stock companies, the partners and
shareholders are the owners of the business.
Accounts are maintained using the double-entry The double-entry system is used, but only a cash
system. book is maintained.

Standard costing is a specialised technique of costing under which standard costs are pre-determined, actual
costs are compared with such predetermined costs, the variations between the two are noted and analysed as to
their causes so that corrective measures may be taken to control the factors leading to unfavourable variations.
The system of standard costing, thus, involves various steps—from the setting up of standards to finally
exercising control over costs.
It aims at assessing or prefixing the costs of a product, process or operation under standard operating conditions.
It serves as an effective tool in the hands of the management for planning, co-ordination and control of various
activities of the business. There is a continuous process of growth effected in business through the help of
standard costing technique since the standard costs set in are realistic, capable of being attained and are revised
from time to time according to needs and requirements of the business enterprise.
Standard costing is the practice of estimating the expense of a production process. It's a branch of cost
accounting that's used by a manufacturer, for example, to plan their costs for the coming year on various
expenses such as direct material, direct labor or overhead.

The MSc Management Accounting and Control concentrates on enabling managers to achieve organizational

goals. During this programme, you will gain knowledge about management accounting and financial
management techniques. These techniques are used to provide (non-)financial information for decision-making
and to develop planning and control systems. You will also develop the skills needed to communicate the
information in an effective manner. The techniques will be placed in a context of broader issues, such as
strategy, human behaviour and culture, and special attention will be paid to changes in accounting systems. You
will explore subjects like management accounting, financial management, management control and management
of change. Therefore, the Management Accounting and Control programme will enable you to connect the
information needs of managers to state-of-the-art knowledge about human behaviour.

The scope of Management Accounting is broader than the scope of cost accounting. In cost
accounting, as we have seen, the primary emphasis is on cost and it deals with collection, analysis,
relevance, interpretation and presentation for various problems of management. Management Accounting is
an accounting system which will help the Management to improve its efficiency. .
Features of Management accounting
The features of Management Accounting are given below.
 The Management Accounting data are derived from both, the financial accounting and cost accounting.
 The main thrust in management accounting is towards determining policy and formulating plans to
achieve desired objectives of management.
 Management Accounting makes corporate planning and strategy effective and meaningful.
 It is concerned with short and long range planning and uses highly sophisticated techniques like
sensitivity analysis, probability techniques, decision tree, ratio analysis etc for planning, control and
evaluation.
 It is futuristic in approach and predictive in nature.
 Management accounting system cannot be installed without proper cost accounting system.