Management Accounting

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Recommended: Purposes of managerial accounting

From the management accounting viewpoint of business, the process of decision-making is the main aim of management accounting. The way of how accountants make their decisions has been studied and investigated widely. It is very helpful in management accounting to categorize decisions in to strategic and tactical and in to short run and long run decisions.

The objective of management accounting is to make a good decision as the process of management decision-making is extremely subjective. A good decision is depends on the aims and purposes of management. As a result, the management has to set the aims and purposes in order to make decisions. For instance, the management is required to decide strategic aims such as the pricing strategy, product line, quality of product and profit purpose.

Actually, management accounting is made up of and contains a group of useful and helpful tools in decision-making including profits and expenses data. Despite the fact that a lot of methods and techniques seems to be simplistic in characteristics and features, they have shown their great value and significance.

There are several tools in management accounting like C‑V‑P analysis; budgeting, variance analysis and incremental analysis.

These tools are not created to manage and deal with long range purposes and decisions. The capital budgeting models is the only tool that designed to more than one year. As a result, the outcomes acquired and gained from using management accounting tools are supposed to be beneficial for the short run planning. Expectantly, decisions which are beneficial for the short run planning can be also beneficial for the long run planning. On the other hand, it is vital for the management accountants to be careful a...

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... decisions. Each decision needs to use a management accounting tool in order to make a good decision. The tools of management accounting can be used and applied just if the management accountant supplies the data required by the particular tool in successful way.

In conclusion, financial statement is consisting of four major basic which are balance sheet, income statement, cash flow and tax. They are all very important and essential to set up a full financial statement. It is very significant for financial statements to be comprehensible, clear, relevant, reliable and comparable. Actually, financial statement is very important to provide the customer with basic information about the financial situation, performance and changes in the financial state of a project. Essentially, financial statement is effective extensively for customers in making economic decisions.

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