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    Ntre, Scope Accntng MNGMNT

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    Pankaj2c
    Management accounting provides information to assist management in planning, decision-making, and controlling operations. It involves techniques like forecasting, cost accounting, budgeting, inventory control, and statistical analysis. The primary objective of management accounting is to help maximize profits or minimize losses by enabling management to perform functions more effectively through tools for planning, coordination, motivation, and decision-making. Some limitations include that it considers only past financial data, has a wide scope making results less accurate, and requires organizational changes that face opposition.

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    Ntre, Scope Accntng MNGMNT

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    Pankaj2c
    46 views4 pages
    Management accounting provides information to assist management in planning, decision-making, and controlling operations. It involves techniques like forecasting, cost accounting, budgeting, inventory control, and statistical analysis. The primary objective of management accounting is to help maximize profits or minimize losses by enabling management to perform functions more effectively through tools for planning, coordination, motivation, and decision-making. Some limitations include that it considers only past financial data, has a wide scope making results less accurate, and requires organizational changes that face opposition.

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    Ntre,Scope Accntng Mngmnt

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    Management accounting provides information to assist management in planning, decision-making, and controlling operations. It involves techniques like forecasting, cost accounting, budgeting, inventory control, and statistical analysis. The primary objective of management accounting is to help maximize profits or minimize losses by enabling management to perform functions more effectively through tools for planning, coordination, motivation, and decision-making. Some limitations include that it considers only past financial data, has a wide scope making results less accurate, and requires organizational changes that face opposition.

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    46 views4 pages

    Ntre, Scope Accntng MNGMNT

    Uploaded by

    Pankaj2c
    Management accounting provides information to assist management in planning, decision-making, and controlling operations. It involves techniques like forecasting, cost accounting, budgeting, inventory control, and statistical analysis. The primary objective of management accounting is to help maximize profits or minimize losses by enabling management to perform functions more effectively through tools for planning, coordination, motivation, and decision-making. Some limitations include that it considers only past financial data, has a wide scope making results less accurate, and requires organizational changes that face opposition.

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    Nature or characteristics of management accounting: 1.

    Forecasting: It is not confined only to the collection of historical data or facts but also attempts to highlight upon What should have been. 2. Supply information: It provides information to the management and not decision. 3. Increase in efficiency: It is basically concerned with the problem of choice. 4. Techniques and concepts: It uses special techniques and concepts to make accounting data more useful. 5. Cause and effect analysis: It attempts to examine the cause and Effect of different variables. This may be the reason that management accounting is called as science. 6. No fixed norms: No set of rules and formats like double entry system of book keeping. 7. Assists management: It assists management in several ways in its functions but does not replace it. 8. Achieving of objectives: The principal objective is to serve the needs of management.

    SCOPE OF MANAGEMENT ACCOUNTING


    Management accounting is concerned with presentation of accounting information in the most useful way for the management. Its scope is, therefore, quite vast and includes within its fold almost all aspects of business operations. However, the following areas can rightly be identified as falling within the ambit of management accounting: (i) 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. (ii) Cost Accounting: Standard costing, marginal costing, opportunity cost analysis, differential costing and other cost techniques play a useful role in operation and control of the business undertaking. (iii) Revaluation Accounting: This is concerned with ensuring that capital is maintained intact in real terms and profit is calculated with this fact in mind. (iv) Budgetary Control: This includes framing of budgets, comparison of actual performance with the budgeted performance, computation of variances, finding of their causes, etc. (v) Inventory Control: It includes control over inventory from the time it is acquired till its final disposal. (vi) Statistical Methods: Graphs, charts, pictorial presentation, index numbers and other statistical methods make the information more impressive and intelligible. (vii) Interim Reporting: This includes preparation of monthly, quarterly, half-yearly income statements and the related reports, cash flow and funds flow statements, scrap reports, etc. (viii) Taxation: This includes computation of income in accordance with the tax laws, filing of returns and making tax payments. (ix) Office Services: This includes maintenance of proper data processing

    and other office management services, reporting on best use of mechanical and electronic devices. (x) Internal Audit: Development of a suitable internal audit system for internal control.

    Objectives of management accounting; The primary objective is to enable the management to maximize profits or minimize losses. The fundamental objective of management accounting is to assist management in their functions. The other main objectives are, 1. Planning and policy formulation: planning is one of the primary functions of management. It involves forecasting on the basis of available information. 2. Help in the interpretation process: The main object is to present financial information. The financial information must be presented in easily understandable manner. 3. Helps in decision making: Management accounting makes decision making process more modern and scientific by providing significant information relating to various alternatives. 4. Controlling: The actual results are compared with pre determined objectives. The management is able to control performance of each and every individual with the help of management accounting devices. 5. Reporting: This facilitates management to take proper and timely decisions. It presents the different alternative plans before the management in a comparative manner. 6. Motivating: Delegation increases the job satisfaction of employees and encourages them to look forward. so it serves as a motivational devise. 7. Helps in organizing: return on capital employed is one of the tools if management accounting. All these aspects are helpful in setting up effective and efficient organization. 8. Coordinating operations: It provides tools which are helpful in coordinating the activities of different sections.

    Functions of management accounting: The basic function of management accounting is to assist the management in performing its functions effectively. The other functions are, 1. Modification of data: Accounting data as such are not suitable for managerial decision making and control purposes. The modification of data in similar groups makes the data more useful and understandable. 2. Planning and forecasting: under the process of planning, management formulates policies and executes plans to achieve the desired objectives. 3. Financial analysis and interpretation: the accounting data is analyzed and interpreted meaningfully for effective planning and decision making. The interpretation is most important function of management accounting. 4. Communication: Management accounting is an important medium of communication. Different levels of management need different types of information.

    5. Facilitate managerial control: Management accounting enables all accounting efforts to be directed towards the attainment of goals efficiently by controlling then operations of the company more effectively. 6. Use of qualitative information: mere financial data and its analysis and interpretation are not sufficient for decision making. 7. Decision making: management accounting supplies analytical information regarding various alternatives and the choice of management is made easy. 8. Coordinating: coordination is the essence of managerial activity. It helps to increase the efficiency of organizations. Advantages of management accounting: 1. Helps in decision making: Helps to make decisions like pricing, make or buy, acceptance of orders, selection of product mix etc,. 2.Helps in planning: Planning includes profit, budget, capital investment and financing. 3.Helps in organizing: It helps to develop organizational structure. 4.Facilitates communication: It provides up to date information to evaluate the performance. 5.Helps in coordinating: It helps to coordinate the department activities and to achieve their goals. 6.Evaluation and control of performance: It assists to find weak area to take corrective actions. 7.Interpretation of financial information: This will helps to quick decision making. 8.Economic appraisal: It includes social and economic forces.

    Limitations of management accounting: 1. Based on accounting information: It considers only the past financial data so, its not reliable. 2. Wide scope: It has wide scope so, the result will be inaccurate. 3. Costly; It applied only big concerns. 4. Evolutionary stage: Tools end techniques are not fully developed. 5. Opposition to change: It requires number of changes in the organization. 6. Intuitive decision:

    It helps to take scientific decision making. 7. Not an alternative to management: It will not replace the management and administration.

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