Introduction of Management Accounting ..

MANAGEMENT
ACCOUNTING
MANAGEMENT ACCOUNTING ALSO IS KNOWN
AS MANAGERIAL ACCOUNTING AND CAN BE
DEFINED AS A PROCESS OF PROVIDING
FINANCIAL INFORMATION AND RESOURCES
TO THE MANAGERS IN DECISION MAKING.
MANAGEMENT ACCOUNTING IS THE PROCESS OF
PREPARING REPORTS ABOUT BUSINESS OPERATIONS
THAT HELP MANAGERS MAKE SHORT-TERM AND
LONG-TERM DECISIONS. IT HELPS A BUSINESS
PURSUE ITS GOALS BY IDENTIFYING, MEASURING,
ANALYSING , INTERPRETING AND COMMUNICATING
INFORMATION TO MANAGERS.

DEFINITION
“Management Accounting can be
defined as the art of presenting to
management such figures, whether
in terms of money or other units,
as will assist management to do its
job.”
BOSTOCK

NATURE OF
MANAGEMENT
ACCOUNTING
• PROVIDING ACCOUNTING INFORMATION
• CAUSE AND EFFECT ANALYSIS
• USE OF SPECIAL TECHNIQUES AND CONCEPTS
• TAKING IMPORTANT DECISIONS
• ACHIEVING OBJECTIVES
• SUPPLIES INFORMATION
• CONCERNED WITH FORECASTING
• NO FIXED NORMS FOLLOWED

CHARACTERISTICS OF
MANAGEMENT
ACCOUNTING
1.PROVIDING ACCOUNTING INFORMATION
2.CAUSE AND EFFECT ANALYSIS
3.USE OF SPECIAL TECHNIQUES AND CONCEPTS
4.TAKING IMPORTANT DECISIONS
5.ACHIEVING OF OBJECTIVES
6.NO FIXED NORMS FOLLOWED
7.INCREASE IN EFFICIENCY
8.SUPPLIES INFORMATION AND NOT DECISION
9.CONCERNED WITH FORECASTING

SCOPE OF
MANAGEMENT
ACCOUNTING
1. FINANCIAL ACCOUNTING
2. COST ACCOUNTING
3. FINANCIAL MANAGEMENT
4. BUDGETING AND FORECASTING.
5. INVENTORY CONTROL.
6. REPORTING TO MANAGEMENT.
7. INTERPRETATION OF DATA.
8. CONTROL PROCEDURES AND METHODS.
9. INTERNAL AUDIT
10.TAX ACCOUNTING.
11.OFFICE SERVICES.

OBJECTIVE OF
MANAGEMENT
ACCOUNTING
1. PLANNING AND POLICY FORMULATION.
2. HELPFUL IN CONTROLLING PERFORMANCE.
3. HELPFUL IN ORGANISING.
4. HELPFUL IN INTERPRETING FINANCIAL
INFORMATION.
5. MOTIVATING EMPLOYEES.
6. HELPFUL IN MAKING DECISIONS.
7. REPORTING TO MANAGEMENT
8. HELPFUL IN CO-ORDINATION.
9. HELPFUL IN TAX ADMINISTRATION.

FUNCTIONS OF
MANAGEMENT
ACCOUNTING
1.PLANNING AND FORECASTING.
2.MODIFICATION OF DATA
3.FINANCIAL ANALYSIS AND INTERPRETATION.
4.FACILITATES MANAGERIAL CONTROL
5.COMMUNICATION.
6.USE OF QUALITATIVE INFORMATION.
7.CO-ORDINATING.
8.HELPFUL IN TAKING STRATEGIC DECISIONS.
9.SUPPLYING INFORMATION TO VARIOUS LEVELS OF
MANAGEMENT.

IMPORTANCE OF
MANAGEMENT
ACCOUNTING
PLANNING
DECISION MAKING
IDENTIFY EARLY SIGNS OF PROBLEMS
STRATEGIC MANAGEMENT

MANAGEMENT
ACCOUNTING PROCESS
1. PLANNING
2. PERFORMANCE RATING
3. MAINTAINING OPERATIONAL STATUS
4. FURTHER, IT ALSO HELPS IN CALCULATING AND
ANALYZING THE COST OF PRODUCTION ALTOGETHER. IT
ALSO CONTRIBUTES IN IDENTIFYING THE PACE
DECREASING OBSTACLES AND HELPS THE MANAGERS IN
TACKLING THOSE ERRORS. THE MANAGEMENT SYSTEM
PROVIDES DATA FOR FINANCIAL ACCOUNTING AS WELL.

TOOLS AND TECHNIQUES
OF MANAGEMENT
ACCOUNTING
15%
85%
Business
Graphic
1. FINANCIAL POLICY AND ACCOUNTING.
2. ANALYSIS OF FINANCIAL STATEMENTS
3. HISTORICAL COST ACCOUNTING.
4. BUDGETARY CONTROL.
5. STANDARD COSTING.
6. MARGINAL COSTING.
7. DECISION ACCOUNTING.
8. REVALUATION ACCOUNTING.
9. CONTROL ACCOUNTING.
10.MANAGEMENT INFORMATION SYSTEM

MANAGEMENT
ACCOUNTING
ADVANTAGES OF
1.INFORMED DECISION-MAKING
2.COST CONTROL
3.PERFORMANCE MEASUREMENT
4.BUDGETING AND FORECASTING
5.ENHANCED ACCOUNTABILITY

MANAGEMENT
ACCOUNTING
LIMITATIONS OF
1. BASED ON ACCOUNTING INFORMATION.
2. LACK OF KNOWLEDGE
3. INTUITIVE DECISIONS.
4. NOT AN ALTERNATIVE TO ADMINISTRATION.
5. TOP HEAVY STRUCTURE.

RELATIONSHIP B/W FINANCIAL, COST
& MANAGEMENT ACCOUNTING

MANAGEMENT
ACCOUNTANT
MANAGEMENT ACCOUNTANT IS AN OFFICER WHO IS ENTRUSTED WITH
MANAGEMENT ACCOUNTING FUNCTION OF AN ORGANIZATION. HE PLAYS A
SIGNIFICANT ROLE IN THE DECISION MAKING PROCESS OF AN ORGANIZATION.
THE ORGANIZATIONAL POSITION OF MANAGEMENT ACCOUNTANT VARIES
FROM CONCERN TO CONCERN DEPENDING UPON THE PATTERN OF
MANAGEMENT SYSTEM.

QUALITIES OF A MANAGEMENT
ACCOUNTANT
1. DECISION-MAKING SKILLS
2. PROVIDING THE RIGHT INFORMATION
3. ACHIEVING THE OBJECTIVES
4. IMPROVING THE EFFICIENCY OF THE
PROCESSES
5. STRONG KNOWLEDGE OF TECHNOLOGY
6. FORECAST OF THE FUTURE

ROLES OF A
MANAGEMENT ACCOUNTANT
MANAGEMENT ACCOUNTANT, OTHERWISE CALLED CONTROLLER, IS CONSIDERED TO BE A PART OF THE
MANAGEMENT TEAM SINCE HE HAS THE RESPONSIBILITY FOR COLLECTING VITAL INFORMATION, BOTH
FROM WITHIN AND OUTSIDE THE COMPANY. THE FUNCTIONS OF MANAGEMENT ACCOUNTANT ARE:
• TO ESTABLISH, COORDINATE AND ADMINISTER, AS AN INTEGRAL PART OF MANAGEMENT, AN ADEQUATE
PLAN FOR THE CONTROL OF OPERATIONS. SUCH A PLAN WOULD PROVIDE, TO THE EXTENT REQUIRED IN
THE BUSINESS COST STANDARDS, EXPENSE BUDGETS, SALES FORECASTS, PROFIT PLANNING, AND
PROGRAMME FOR CAPITAL INVESTMENT AND FINANCING, TOGETHER WITH NECESSARY PROCEDURES TO
EFFECTUATE THE PLAN.
• TO COMPARE PERFORMANCE WITH OPERATING PLAN AND STANDARDS AND TO REPORT AND INTERPRET
THE RESULTS OF OPERATION TO ALL LEVELS OF MANAGEMENT, AND TO THE OWNERS OF THE BUSINESS.
• TO ADMINISTER TAX POLICIES AND PROCEDURES.
• TO SUPERVISE AND COORDINATE PREPARATION OF REPORTS TO GOVERNMENT AGENCIES.

DUTIES & RESPONSIBILITIES OF A
MANAGEMENT ACCOUNTANT
THE PRIMARY DUTY OF MANAGEMENT ACCOUNTANT IS TO HELP MANAGEMENT IN TAKING CORRECT
POLICY-DECISIONS AND IMPROVING THE EFFICIENCY OF OPERATIONS. FOLLOWING ARE THE DUTIES
OF MANAGEMENT ACCOUNTANT OR CONTROLLER:
• THE INSTALLATION AND INTERPRETATION OF ALL ACCOUNTING RECORDS OF THE CORPORATIVE.
• THE PREPARATION AND INTERPRETATION OF THE FINANCIAL STATEMENTS AND REPORTS OF THE
CORPORATION.
• CONTINUOUS AUDIT OF ALL ACCOUNTS AND RECORDS OF THE CORPORATION WHEREVER
LOCATED.
• THE COMPILATION OF COSTS OF DISTRIBUTION.
• THE COMPILATION OF PRODUCTION COSTS.

Introduction of Management Accounting ..

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