Defined management accounting?, describe it's objectives and funtion
Answers
Answer:
Definition: Management accounting, also called managerial accounting or cost accounting, is the process of analyzing business costs and operations to prepare internal financial report, records, and account to aid managers’ decision making process in achieving business goals. In other words, it is the act of making sense of financial and costing data and translating that data into useful information for management and officers within an organization.
Explanation:Management accounting means analyzing and recording business activities for internal company use in an effect to increase efficiency and productivity.
There are many objectives of but the prime objective is to assist the management team of an organization in improving the quality of their decisions. Purpose of management accounting is to help the managerial team with financial information so that they can execute business operations and activities more efficiently. Following is the list of all benefits of management accounting –
Decision Making
Planning
Controlling business operations
Organizing
Understanding financial data
Identifying business problem areas
Strategic Management
Decision Making
This is the most important benefit of the process of management accounting. In fact, it is the main purpose of it. In this form of accounting, we use techniques from all fields like costing, economics, statistics, etc.
It provides us with charts, tables, forecasts and various such analysis that makes the process of decision making easier and more justified.
Planning
Managerial accounting does not have any strict timelines like financial accounting. It is, in fact, a continuous and ongoing process.
So financial and other information is presented to the management at regular intervals like weekly, monthly or sometimes even daily.
Hence managers can use this analysis and data to plan the activities of the organization. For example, if the recent data shows a dip in the sales for a certain region, then the sales manager can advise his team and plan some action to rectify the situation.
Identifying Business Problem Areas
If some product is not performing well, or some department is running into unexpected losses, etc. managerial accounting can help us identify the underlying cause.
Actually, if the management is diligent and their data and reports are frequent, they can identify the problem very early on. This will allow the management to get ahead of the problem.
Strategic Management
Concept of management accounting is not mandatory by any law. So it can have its own structure according to the company’s requirements. So if the company feels certain areas need more in-depth analysis or investigation it can do so freely.
This allows them to focus on some core areas. The information presented to them allows them to make strategic management decisions.
Like if the company wishes to launch a new product line, or discontinue an existing one, management accounting will play a huge part in this strateg