Functions of management accounting | BCom notes

Functions of management accounting

Management accounting is a part of accounting. It has developed out of the need for making more and more use of accounting for taking managerial decision. Management is assign the function of classification, presentation and interpreting data in such a way that it helps management in controlling and running the enterprises in an efficient and economical manner.

Functions

These are the following functions of management accounting :- 

(1) Planning and forecasting : Management fixed various targets to achieve by the business in near future. Planning and forecasting are essential element for achieving business objectives. One of the important function of the Management accounting is to keep management in planning of short- term and long term period and also in making forecast for future.

(2) Modifications of data  : Management accounting helps in modifying accounting data. The information is modify in such a way that it becomes useful for the management. tha modification of data in similar group makes the data more understandable and useful . Management accountant classify and modified information according to the requirements of the management.

(3) Financial analysis and interpretation : Management accountant undertake the job of presenting financial data in a simplify way. Financial data is generally collected and presented in a technological ways. Management accountant analyses and interprets financial data in a simple way and present it in a non-technical language.

(4) Facilitates managerial Control  : Management accounting is very useful in controlling performance  all accounting errors are directed towards control of the enterprises. The standard of various departments and individuals are set-up. The actual performance is recorded and deviation are calculated. It enable the management to assess the performance of every thing in the Organizations.

(5) Communication  : Management accounting establishes communication within the Organizations and with the outside world. The activity of the concerns are communicated to the outsider such as bankers, investors, creditors, government agencies etc.

(6) Use of qualitative information  : Management accounting collects and uses qualitative information also. The use of qualitative information is as helpful as monetary information.

(7) Coordination  : The Coordination among different department is essential for smooth running of the concerns. Management accountant act as a coordinator among different financial department through budgeting and financial reports. The target and performance of department are communicated to them from time to time.

(8) Helps in Taking strategic decision  : Management accounting helps in taking strategic decision. It supply analytical information regarding various alternative and the choice of management is made easy.

(9) Supplying information to various levels of management  : Every management level need accounting information for decision making and policy exicution. There are three levels of management namely, Top level, Middle level and Lower level of management. Management accounting supply accounting information to the different level of management.