what is management accounting? meaning, definitions and features of management accounting

Management Accountings

management accounting is comprised of two word management and Accounting .it is the study of managerial aspect of Accounting. the emphasis of management Accounting is to redesign Accounting in such a way that it is helpful to the management in formation of policy , control  of execution and appreciation of effectiveness. it is that system of accounting which helps management  in carrying out it's functions more efficiently.

  

Definitions

Anglo-American Council on Productivity -

"maccounting is the presentation of  Accounting information in such a ways as to assist management in the creation of policy and the day-to-day operations of an undertaking." 

Characteristics of nature of management Accounting

These are the following important features of management Accounting :-

(1) Providing accounting information : Management accounting is based on accounting information. The collection and Classification of data is the primary function of management Accounting.  The information so collected is used by the management for taking policy decision. Management accounting involves the presentation of information in a way it suits management needs. The accounting data is used for reviewing various policy decision. Management Accounting is a service function and it provides necessary in different levels of Management.

(2) Cause and effect analysis : Financial Accounting is limited to the preparation of profit and loss Account and finding out the ultimate results, i.e. profit or loss management accounting goes a  step further. The cause and effect Relationships is discussed in Management- Accounting. If there is a loss, the reason for the loss are proved. If there is a profit the factors directly influence the profitability are also studied. The figure of profit are compared to sales, different expenditure, current assets, interest payables, share capital, etc . So the study of cause and effect Relationships is possible in management accounting.

(3) Use of special techniques and Concept : Management accounting used special techniques and concept to make Accounting data more useful.  The techniques usually used include financial planning and analysis, standard costing , budgetary control, marginal costing, project appraisal, control accounting etc. The type of techniques used will be determined according to the situation and necessity.

(4) Taking important decision : Management accounting helps in taking various important decision. It supply necessary information to the management which may base it decision. The implications of various alternative decision are also taken into account while taking important decision.

(5) Achieving of Objectives : In management accounting the accounting information used for formulating plans and setting up Objectives. The recording of actual performance and comparing it with targeted figures will give an idea to management about the performance of various departments. In case there are deviation between standard set and actual performance of various departments corrective measures can be take at once. All this is possible with the help of budgetary control and standard costing.

(6) No fixed norms followed : In financial accounting certain rules are followed for preparing different accounting books. On the other hand no specific rules are followed in management accounting. Though the tool of management accounting are the same but their use differs from concern to concern. The Analysis of data depends upon the person using it. The deriving of conclusion also depends upon the Intelligence of Management Accountants. Every concerns uses the figures in its own way. The presentation of figure will be in the way which suits the concern most. So every concerns has its own rules and by rules for analysing the data.

(7) Increase in efficiency : The purpose of using accounting information to increase efficiency of the concern. The efficiency can be achieved by setting up goals for each department or section. The performance appraisal will enable the management to pin point efficient and effective spots. An effort is made to corrective measures so that efficiency is improved. The constant review of working will make the staff cost conscious. Every one will try to control cost on one owns part.

(8) Supplies information and not decision : The management accounting supplies information to the management. The decision are to be taken by the top management. The information is classified in the manner in which is required by the Management. Management accounting is only to guide and not to supply decision. The data is to be used by management for taking various decision. How's the data to be utilized will depend upon the Calibre and efficiency of the management.

(9) Concerned with forecasting : The management accounting is Concerned with the future. It helps the management in planning and forecasting. The historical information is used to plan future course of action. The information is supplied with the object to guide management for taking future decision.