Objectives of management accounting

Management accounting

Management accounting is the adoption and analysis of accounting information and it' s diagnosis and explanation in such a way as to assist management.

Objectives of Management accounting

These are the following important objectives of management accounting  :-

(1) Planning and policy formulation : The object of Management accounting is to supply necessary data to the management for formulating plans. Planning is essentially related to taking decision for future. It also includes Forecasting, setting goals and deciding attractive course of action.

(2) Helpful in controlling performance : Management accounting devices like standard costing and budgetary control are helpful in controlling performance.  The work is divided into different units and separate goals are set up for each units. The object of Management accounting is to make Control over the performance.

(3) Helpful in Organizing : Organizations is related to establishment of relationship among different individuals in the concerns. It also includes the delegation of authority and fixing of responsibility. The object of Management accounting is to provide help in Organizing.

(4) Helpful in interpreting financial information : The main objective of management accounting is to present financial information to the management in such a way that it is easily understood. Financial information is of a technical Nature and Managerial personnel may not be able to understand the significance and utility of various financial statement.

(5)  Motivating employees : Management accounting helps the management in selecting best alternatives of doing the things. Targets are laid down for the employees. They feel motivated in achieving their targets and further incentive may be given for improving their performance.

(6) Helpful in making decisions : Management has to take certain decisions. A decision may have to be taken about the expension or diversification of production. Management accounting helps management in making decisions.

(7) Reporting to management  : One of the primary objective of management accounting is to keep the management fully informed  about the tallest position of the concerns. This helps management in taking decision in a proper way and timely decision.

(8) Helpful in Co ordination : Management accounting provide tools which are helpful in Co-ordinating the activities of the different sections or departments. Co-ordination is done through functional budgeting, management accounting acts as a  co ordinator and reconcile that activities of different sections.

(9) Helpful in Tax administration : The complexity of tax Systems are increased every days. Management accounting helps in assisting various tax liabilities and depositing correct amount of taxes with the concerns authorities. Various tax return are to be filled under different tax laws. Tax administration is carried on with the advice and guidance of the management accountant.