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Manangement Accounting

Management accounting can be viewed as accounting oriented towards management functions and decision-making. It analyzes accounting information to enable more efficient business operations and increase efficiency. Unlike financial accounting, management accounting does not follow fixed norms and rules, as the tools used can vary between organizations depending on their specific business policies and needs. Management accountants provide accounting information and interpretations to guide decision-making, but ultimate decisions are made by higher authorities. A key focus is using historical data to forecast future performance.

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Ishpreet Singh Bagga
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149 views10 pages

Manangement Accounting

Management accounting can be viewed as accounting oriented towards management functions and decision-making. It analyzes accounting information to enable more efficient business operations and increase efficiency. Unlike financial accounting, management accounting does not follow fixed norms and rules, as the tools used can vary between organizations depending on their specific business policies and needs. Management accountants provide accounting information and interpretations to guide decision-making, but ultimate decisions are made by higher authorities. A key focus is using historical data to forecast future performance.

Uploaded by

Ishpreet Singh Bagga
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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Made ByISHPREET SINGH BAGGA

Management accounting can be viewed as Management-oriented Accounting. Basically it is the study of managerial aspect of financial accounting, "accounting in relation to management function". It shows how the accounting function can be re-oriented so as to fit it within the framework of management activity.

Any form of accounting, which enable a business to be conducted more efficiently, can be regarded as Management Accounting
-Institute of Chartered Accountants, England

Management Accounting is concerned with accounting information that is useful to management.


-R.N.Anthony

No Fixed Norms Followed:In financial accounting, we follow different norms and rules for creating ledgers and other account books. But there is no need to follow fixed norms in management accounting. Management accounting tool may be different from one organization to other organization. Using of different tools of management accounting is fully dependent on the persons who are using it. So, business policy of each organization affects rules and regulation of applying management accounting.

Increase in Efficiency:It is the nature of management accounting that it is used for increasing in the efficiency of organization. It scans the points of inefficiency through analysis of accounting information. By taking action for improving, organization can increase the efficiency

Supplies Information not Decisions:Management accountant supplies accounting facts and information and also provides interpretation, but decision making is fully dependent on higher authorities. Management accounting is just guide.

Concerned with Forecasting :It is the temperament of management accounting that it is fully concerned with forecasting. In management accounting, historical accounting information is analyzed through common size financial statement, ratio analysis, fund flow analysis and accounting data tendency for knowing the probability of next fact.

Financial accounting Cost Accounting Internal Audit Budgetary control Inventory Control Taxation Statistical Methods Interim Reporting

Provides data: Modifies data Analyses and interprets data Serves as a means of communicating Facilitates control Uses also qualitative information

Management versus Financial


Accounting
Primary users Purposes of information Management Accounting Internal the companys managers Help managers plan and control operations Financial Accounting External investors and creditors Help with investment and credit decisions

Focus and time dimension


Type of report

Relevance of information; focus on the future


Internal reports No audit needed Detailed reports on a weekly or daily basis Concern about how reports affect employee behavior

Relevance and reliability of information; focus on the past


Financial statements prescribed by GAAP Audit by CPAs Summarized reports quarterly and/or annually Concern about adequate disclosure

Scope of information Behavioral

Management versus Cost Accounting


Management Accounting Cost Accounting

Primary objective

To represent the cost data to increase the efficiency of management


It is mainly future-oriented

To determine and record the cost per unit of products or services


It is based on past and present facts Follows certain priciples,proformas & procedures

Nature

Principles, Procedures & Proformas

Does not follows any proformas,principles for reporting

Utility

Information provided are useful only to the management


It is wider

Information provided are useful to external and internal parties


It is narrow

Scope

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