This section Covers..
01. Meaning and Definition of Management accounting
02. Aims and Tasks

Meaning:

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
In contrast to financial accountancy information, management accounting information is:

* usually confidential and used by management, instead of publicly reported;

* forward-looking, instead of historical;

* pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards.

 

Definition:

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 Resource (economics) resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"

The American Institute of Certified Public Accountants (AICPA) states that management accounting as practice extends to the following three areas:

• Strategic Management—advancing the role of the management accountant as a strategic partner in the organization.
• Performance Management—developing the practice of business decision-making and managing the performance of the organization.
• Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization

Aims:

1. Formulating strategy|strategies
2. Planning and constructing business activities
3. Helps in making decision
4. Optimal use of Resource (economics)
5. Supporting financial reports preparation
6. Safeguarding asset

Management Task:

Listed below are the primary tasks/ services performed by management accountants. The degree of complexity relative to these activities is dependent on the experience level and abilities of any one individual.

• Variance Analysis
• Rate & Volume Analysis
• Business Metrics Development
• Price Modeling
• Product Profitability
• Geographic vs. Industry or Client Segment Reporting
• Sales Management Scorecards
• Cost Analysis
• Cost Benefit Analysis
• Cost-Volume-Profit Analysis
• Life cycle cost analysis
• Client Profitability Analysis
• Capital Budgeting
• Buy vs. Lease Analysis
• Strategic Planning
• Strategic Management Advise
• Internal Financial Presentation and Communication
• Sales and Financial Forecasting
• Annual Budgeting
• Cost Allocation
• Resource Allocation and Utilization

 

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