The Role of Management Accounting in creating Added Value to the Firm Essay example

The Role of Management Accounting in creating Added Value to the Firm Essay example

Length: 1519 words (4.3 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

The essay sets to provide a perspective upon Management accounting and the effect it can have in creating added value for a firm. It purposes to do so by first giving a short definition and history of management accounting, identifying the differences between management accounting and financial accounting and then proceeding to analyzing some of the most important tools for management accounting. The pylons of the essay will be defining the strategy and its role in management accounting, presenting the plan–do–check–act cycle, the strategy map and the Balanced Scorecard.
Management accounting, due to the broad area of interest, can be defined in several pertinent ways. According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities.
Another, more complex definition, would be that management accounting is the process of supplying the managers and employees in an organization with relevant information, both financial and nonfinancial, for making decisions, allocating resources, and monitoring, evaluating, and rewarding performance. The reported expense of an operating department, such as the assembly department of an automobile plant or an electronics company, is one example of management accounting information. Other examples are the cost of producing a product, th...


... middle of paper ...


...gement accounting is further used to measure the cost of serving customers and customer profitability. Cumulating the information provided in this manner, the executives can make decisions related to the overall department and business performance. Further on in the essay the importance of the nonfinancial information in the manager’s planning and control decisions will be highlighted. The particular nonfinancial measures most useful for an organization will vary based on its industry and strategy, but generally will include measures of customer loyalty, process quality, and employee capabilities and motivation.



Works Cited

Wikipedia – Charted Institute of Management Accountants http://en.wikipedia.org/wiki/Chartered_Institute_of_Management_Accountants
Management accounting - Information for Decision-Making and Strategy Execution/ A. Atkinson/ R. Kaplan, p.27

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Managing Cash Flow Of A Firm Essay

- Managing cash flow is an important task entrusted to the finance staff rather than to the accounting department because the goal of the financial staff is to forecast the future performance of a firm. Whereas, the goal of the accounting department is to monitor day to day accounting operations and post transactions that have already occurred. Thus, accountants prepare accounting records and financial staff uses those records to efficiently manage the firm’s assets and liabilities based on the existing information....   [tags: Net present value, Investment, Finance]

Powerful Essays
724 words (2.1 pages)

Essay on Combining My Interests in Energy Dependence and Management

- From growing up in Singapore, the “Clean and Green” city, to living in “Oil Country” Texas, and making frequent trips to India I have been exposed to a wide spectrum of energy dependence. On one such visit to an Ashram in India, I was amazed by the effective use of solar panels and internal water recycling plants to support a small, ascetic community, tucked away in a city that lost electricity for a few hours every day. This experience inspired me to examine the potential for large-scale applications of similar clean technologies to mitigate challenges such as high energy prices, volatile foreign oil sources, and food shortages in the developed world....   [tags: Management, energy, ]

Powerful Essays
1146 words (3.3 pages)

Strategic Management : Strategic Planning And Decision Making Methods Essay

- This paper examines the strategic management sector pertaining to financial planning and decision making methods. Managers use these tools often, in order to carry on day to day operations at their firms. Finding the right combinations of cost allocation and implementing strategic measures, can be complex at times. However, to remain competitive in the industry, companies utilize benchmarking and other techniques in order to monitor their competitors’. This paper analyzes various approaches that managers may use, in order to make sound financial planning and decision making....   [tags: Strategic management, Decision making, Cost]

Powerful Essays
1231 words (3.5 pages)

Essay about The Role Of Integration And How Effective Integration

- Jayanth and Keah-Choon. (2009) mentioned that the role of integration and how effective integration takes place is very important in the current global landscape one of their research objective is to understand how effective integration takes place between a firm and its 3PL. Firms are aware that integration is important but their attempts are failed at internal and external integration largely due to trends of outsourcing and because a significant part of a products value-added function is committed and traced to external functions....   [tags: Supply chain management, Supply chain, Logistics]

Powerful Essays
1057 words (3 pages)

The Role Of Intuition And Decision Making Essay

- Role of intuition in decision making Referring to Bacon (2013) in the journal article “Intuitive intelligence in leadership” states that he role of intuition in decision making is important. A manager uses it oftentimes for quick and fast decisions. It is merely known, perceived, understood or believed by instinct. It is the individual’s feelings, nature or routine. When guided by experience with a previous pattern, these responses could be considered the result of intuition Bacon (2013). Gordon as used in Bacon (2013) states that intuitive intelligence may be the most powerful protection for company decision making....   [tags: Decision making, Cognition, Decision theory]

Powerful Essays
725 words (2.1 pages)

The Importance of Logistics Management Essay

- Logistics Management In the Second World War logistics also played an integral role. The allied forces’ invasion of Europe was a highly skilled exercise in logistics, However while the Generals and Field Marshals from the earliest times have understood the critical of logistics, strangely it is only in the recent history that business organizations have come to recognize the vital impact that logistics management can play in gaining a competitive advantage (Christopher 1992). However, we must ask ourselves what is logistics management in the sense that is understood today....   [tags: procurement, movement and storage of goods]

Powerful Essays
3307 words (9.4 pages)

A Report On The Management Group Essay

- This document is considered as a financial document because the financial statement provides the statement of financial position and comprehensive income, and cash flow statement and statement of changes in equity. for example, "The cash flow of the Group Lufthansa from operating activities to 3.4bn euros in the reporting year, which is 1.4bn euros, or 71.6 percent, higher than the figure registered previous year." Question two: The management group strategies consist of four strategies which are Safeguarding position as a leading aviation group, Hub airlines intent on developing quality y leadership, Profitable growth for aviation services, Profitable growth planned for Euro wings in poi...   [tags: Balance sheet, Asset]

Powerful Essays
1540 words (4.4 pages)

Essay on The Role Of Mea And Pte At Randolph Hospital

- Compensation Applied Assignment 1 The Role of MEA and PTE at Randolph Hospital Strategic Compensation 1. In evaluating the Micro Environmental Analysis and Perceived Task Environment that affect Randolph Hospital we first must discover the basics of the STEEP principal. STEEP stands for Sociological and Demographic forces, Technological forces, Economical forces, Environmental forces, and Political Factors. These ‘STEEP’ factors are becoming more increasingly important in all realms of business because of their usefulness in strategic planning but are instrumental in analyzing the macro environment within the changing healthcare industry....   [tags: Health care, Health insurance, Hospital, Patient]

Powerful Essays
1476 words (4.2 pages)

Technology And Management Functions Essay

- Technology and Management Functions Working for a company where the single most paramount objective is to maintain the networks of other organizations makes it clear that management expects not only technology but cutting edge technology and cutting edge leadership to improve business. The company’s current technology is indeed meeting business needs everyday with its processes, systems, distribution of data, database management, telecommunications, and digital electronics. The Information Technology (IT) industry is one that is becoming increasingly important in the global economy and globalized world....   [tags: Information Technology]

Free Essays
944 words (2.7 pages)

Human Resource Mangement Essay

- Human Resource Mangement Describe and critically evaluate the key factors that shape the role and practices of the HR/Personnel function within an organisation with which you are familiar. On the basis of your analysis identify the main HR challenges currently facing this organisation. Relate your analysis to appropriate literature. Introduction People are an important and expensive resource to a business. This asset has the capacity to be highly productive and generate revenue for the firm, but it also requires much attention and maintenance....   [tags: Personnel Management]

Powerful Essays
3479 words (9.9 pages)