Objective of Management Accounting and Notes of Management Accounting
An interesting topic for CS PREPARATION is objective of management accounting is explained below:
Objective of management accounting
- To formulate Planning and Policy: Management accounting assists management in planning the activities of the business. Planning is deciding in advance what is to be done, when it is to be done, how it is to be done, and by whom it is to be done. It involves forecasting on the basis of available information, setting goals, framing policies, determining the alternative courses of actions and deciding on the programme of activities to be undertaken.
- To the interpretation of financial documents: Management accountant presents the information in an intelligible and non-technical manner. This will help the management in interpreting the financial data, evaluating alternative courses of action available and guiding the management in taking decisions and having the most desired financial results.
- To help in control: Management accounting is a useful device for managerial control. Thus, management accountant helps in controlling the performance of the different responsibility centers and take suitable actions in order to correct the adverse deviations by revising the budgets if need be.
- To provide the report: In order to make the conclusions drawn by the management accountant meaningful, they must be implemented in the organisation at various levels. But in actual practice, they lose their significance because it is not feasible to implement such conclusions.
- Helps in Organizing: Management accountant recommends the use of budgeting, responsibility accounting, cost control techniques and internal financial control. This all needs the intensive study of the organisation structure. In turn, it helps to rationalize the organisation structure.
- To Facilitate Coordination of Operations: Management accounting helps the management in co-coordinating the activities of the concern by getting prepared functional budgets in the first instance and then co-coordinating the whole activities of the concern by integrating all functional budgets into one known as a master budget.
- Helps in Motivating Employees: The management accountant by setting goals, planning the best and economical course of action and then measuring the performance, one tries his best to increase the effectiveness of the organisation and thereby motivate the members of the organisation.
- Communicating Up-to-date Information: Management accounting assists management in communicating the financial facts about the enterprise to the persons who are interested in these facts so that they may be guided to a line of action to be pursued. Management needs information for taking decisions and for evaluating the performance of the business.
- Helps in Evaluating the Efficiency and Effectiveness of Policies: Management accounting also lays emphasis on management, audit, which means evaluating the efficiency and effectiveness of management policies. Management policies are reviewed from time to time to make an improvement in them so that maximum efficiency may be achieved.
The proper explanation of the Objective of management accounting with examples is available for CS PREPARATION in Online classes for CS professionals.
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