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AE 27 Lesson 1
AE 27 Lesson 1
Introduction
Definition of Management Accounting
Nature of Management Accounting
Objective of Management Accounting
Scope of Management Accounting
Functions of Management Accounting
Limitations of Management Accounting
Difference between Management accounting and
Financial Accounting
Difference between Management Accounting and Cost
Accounting
Management Accounting Organization
Management Accountant
Functions of Management Accountant
Management accounting can be viewed as
Management oriented Accounting.
It shows how the accounting function can be
re-oriented so as to fit it within the
framework of management activity.
The primary task of Management Accounting
is therefore to redesign the entire accounting
system so as it may serve the operational
needs of the firm.
Management Accounting refers to the
presentation of accounting information in
such as to assist management to the creation
of policy and the day to day operation of an
undertaking.
The term “Management Accounting” covers
all those services by which the accounting
department can assist the top management
and other departments in the formation of
policy, execution and control.
Service Function – it assist management by
providing necessary information related to
accounting.
More Concerned with Future – it is related to
future decision and are taken by analyzing
accounting information for the future.
Selective in Nature – it provides selective
information to the management.
It only supplies data and not a decision
Integrated system
To provide selective information to the
management.
To assist in planning
To assist in decision-making
To assist in controlling
To assist in coordination
To help in reporting
Financial Accounting
Cost Accounting
Revaluation Accounting
Budgetary Control
Inventory Control
Statistical Methods
Interim Reporting
Taxation
Office Services
Internal Audit
Management accounting helps in the
performance of the following functions:
1. Provides data
2. Modifies data
3. Analyzes and interprets data
4. Serves as a means of communicating
5. Facilitates Control
6. Use of quantitative andqualitative information
Proper Planning
Effective Controlling
Increase Efficiency
Maximizing Profitability
Performance Appraisal
Increase Productivity
Based on Accounting Information or
Accounting Data
Lack of Knowledge and Understanding
Lack of Continuity and Coordination
Very Expensive
Time Consuming
Based on Historical Data
Management Accountant is a person who
assist the management in decision-making
by providing necessary accounting
information.
The Management Accountant has a very
significant role to perform in the installation,
development and functioning of an efficient
and effective management information
system.
Important functions of Management
Accountants:
1. Planning
2. Controlling
3. Coordinating
4. Reporting
5. Interpreting
6. Evaluation
7. Advising
8. Other Functions