Question

Please justify the definition of comprehensive and comparable characteristics in management accounting.Explain the benefits from practicing the characteristics towards organizations management account.

Answer 1

MANAGAEMANT ACCOUNTING

Management accounting is a presentation of information in a way to assist the management in the development of various plans and policies and also for the effective and efficient running of day to day activities of Business undertakings. The collection and classification of data are the primary functions of management accounting.

The characteristics of Management accounting are:

• Management accounting provides information which helps in creating new plans and also revaluating existing plans and also provides a detailed information about the financial position which helps in creating decision throughout the levels of management.
• The cause and effect relationship is important because if the company faces any loss then with the data in hand they can easy find out the reason for loss and also compare the sales, expenditures etc.
• Management accounting helps in taking important decision in a company. With the help of historical data we can easily predict future.
• Management accounting helps in achieving business objectives with the actual performance and recorded target it gives the idea of performance of different levels in an organization.
• Management accounting helps in increasing the efficiency of the organization , it helps in setting up the goals for each segment .it helps in increasing the performance appraisal
• Management accounting helps in planning and forecasting ,with the help of historical data it makes easy to plan future course of action and also guide management in future decisions.
• Management Accounting follows rules for different accounting books but there are no special rules for in management account. The rules implementation changes from person to person and concerns to concerns.
• Management accounting provides information not the decisions.
• Management accounting uses special techniques and concepts and it includes planning, analysis, standard costing etc.The techniques used for situations will continuously change according to the situation and necessity