I have to share an accounting concept for management. This is the review for SMU MBA students by financial management MBA book. It is for those students who are busy in preparing their MBA by SMU. Below is review by management accounting blog:
“Management accounting is not only for the record keeping but also it has broader aspects. The managers use the financial statements as resources to make decision in the field of accounting. About the management accounting we can take a look from MBA book of SMU, “Management accounting is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information that helps managers to fulfill organizational objectives.”
Here with the definition of management accounting we can say it is for the fulfill of organization objectives by the managers to use all the financial statements and resources.
Objectives of Management Accounting:
Scope of management accounting
Need for financial statements analysis and inter-firm comparisons
Relevance of cost analysis – overhead analysis, job cost analysis and process cost analysis
Relevance of marginal cost and C.V.P. analysis for short-run decision-making
We should know that all the management process single and most upper goal is decision making. So, decision-making is known as the nucleus of management process. Here we will look a chart to understand of decision-making process:
Meaning and Scope of Management Accounting:
About the meaning of management accounting Charles T. Horgren writes, “Management accounting is the process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information that helps managers to fulfill organizations objectives.”
As I have already mentioned that management accounting is not only the process of keeping records. Records keeping is the process of data accumulation however management accounting is the decision making process. So, the management accounting scope has broader then financial statements and record keeping.
About the evaluation of management accounting the history says that it comes with the industrial revolution from the 18th century. Management accounting is the results of capitalist system.
Management accounting has been divided into four parts – book keeping, financial accounting, accounting and cost accounting and social responsibility accounting.
Like this management accounting has one more main part that is MIS (Management Information Systems). MIS for management accounting is most important process because it collects data and gives the right way to analysis that data to take good decisions by managers.
At last we can give some facts which are necessary in functions of management accounting:
Formulation of a business plan
Implementation of the plan
Designed to achieve the goals of the plan
Formulation of business plans
These are the main function of management accounting an organization. However, we have already discussed on the management accounting chapter. Now, I think I will cover some more facts in the next chapter of financial management accounting chapter.”
Source Via :Introduction to Management Accounting