Accounting in Relation to Management Function

817 Words2 Pages

Management accounting can be viewed as Management concerned with Accounting. Basically, it is the study in order to the management of financial accounting, "accounting in relation to management function". This mention the way accounting function can be arranged again so it can be suitable in the background of management movement. The primary task of management accounting is, to reinvent the whole accounting process so that it may work as operational need of the organization. It provides specific information of accounting of present, past and future and this can be beneficial for basis management process. The financial data are so planned and steadily development that they become a unique tool for management decision. Unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting generates monthly or weekly reports for an organization's internal audiences such as department managers and the chief executive officer. These reports show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and accounts receivable, outstanding debts, raw material and inventory, and may also include trend charts, variance analysis, and other statistics. Also called managerial accounting. Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy". (T.D. Warfield, 2009) The subject of management accounting also encompasses the subject of law, knowledge of which is necessary to find out if the management action is... ... middle of paper ... ...etary as well as non-monetary factors. This all brings inexactness and subjectivity in the conclusions obtained through it. Top-heavy structure: The installation of management accounting system requires heavy costs on account of an elaborate organization and numerous rules and regulations. It can, therefore, be adopted only by big concerns. Opposition to change: Management accounting demands a break away from traditional accounting practices. It calls for a rearrangement of the personnel and their activities, which is generally not like by the people involved. Evolutionary stage: Management accounting is still in its initial stage. It has, therefore, the same impediments as a new discipline will have, e.g., fluidity of concepts, raw techniques and imperfect analytical tools. This all creates doubt about the very utility of management accounting. (Nokes, Sebastian)

Open Document