MANAGEMENT ACCOUNTING

Parminder Bajaj

WHAT IS MANAGEMENT ACCOUNTING?

MANAGEMENT ACCOUNTING COMPRISES OF TWO WORDS MANAGEMENT + ACCOUNTING i.e ACCOUNTING FOR THE USE OF MANAGEMENT. A TEAM OF British industrial accountants and managers HAS DEFINED MANAGEMENT ACCOUNTING AS The presentation of accounting information in such a way as to assist management in creation of policy and day to day operations of an undertaking.

Parminder Bajaj

DIFFERENCE BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING

Purpose of financial accounting is to record various transaction and to know financial position of the firm. 2. Preparation of financial accounting is compulsory 3. In financial accounting only actual figures are recorded.
1.

Management accounting is essential for management in formulating policies and plan.

Financial accounting reports are prepared for external users. 5. Final accounts are prepared at the end of one year.
4.

Preparation of management accounting is not compulsory In management accounting no emphasis is given to actual figures, rather it is based upon estimated figures. Management accounting reports are prepared for internal users. Reports are prepared at regular intervalsParminder Bajaj

Contd..
Financial accounting Management accounting

6. Financial accounts are governed by GAAP.

7.Financial accounts are to be published under companies act. 8. Financial accounts are to be audited under co.act

Management accounting are not governed by any such principals Management accounting is done for management and is not published. Management accounting reports are not audited

Parminder Bajaj

FEATURES OF MANAGEMENT ACCOUNTING

PROVIDING ACCOUNTING INFORMATION CAUSE AND EFFECT RELATIONSHIP USE OF SPECIAL TECHNIQUES AND CONCEPTS TAKING IMPORTANT DECISIONS ACHIEVING OF OBJECTIVES NO FIXED NORMS FOLLOWED INCREASE IN EFFICIENCY SUPPLIES INFORMATION AND NOT DECISION CONCERNED WITH FORCASTING

Parminder Bajaj

SCOPE OF MANAGEMENT ACCOUNTING

FINANCIALACCOUNTING COST ACCOUNTING FINANCIAL MANAGEMENT BUDGETING AND FORECASTING INVENTORY CONTROL REPORTING TO MANAGEMENT INTERPRETATION OF DATA TAX ACCOUNTING

Parminder Bajaj

OBJECTIVES OF MANAGEMENT ACCOUNTING

HELPFUL IN CONTROLLING PERFORMANCE PLANNING AND POLICY FORMULATION HELPFUL IN ORGANISING HELPFUL IN INTERPRETING FINANCIAL INFORMATION MOTIVATING EMPLOYEES HELPFUL IN DECISION MAKING REPORTING TO MANAGEMENT HELPFUL IN COORDINATION HELPFUL IN TAX ADMINISTERATION

Parminder Bajaj

FUNCTIONS OF MANAGEMENT ACCOUNTING

PLANNING AND FORECASTING MODIFICATION OF DATA FINANCIAL ANALYSIS AND INTERPRETATION FACILITATES MANAGERIAL CONTROL COMMUNICATION USE OF QUALITATIVE INFORMATION CO-ORDINATING HELPFUL IN SRATEGIC DECISIONS SUPPLYING INFORMATION TO VARIOUS LEVELS OF MANAGEMENT

Parminder Bajaj

TOOLS AND TECHNIQUES OF MANAGEMENT ACCOUNTING

Analysis of financial statement Historical cost accounting Budgetary control Standard costing

Marginal costing
Decision accounting

Parminder Bajaj

IMPORTANCE OF MANAGEMENT ACCOUNTING

INCREASES EFFICIENCY
PROPER PLANNING MEASUREMENT OF PERFORMANCE MAXIMISING PROFITABILITY IMPROVES SERVICE TO CUSTOMER EFFECTIVE MANAGEMENT CONTROL

Parminder Bajaj

LIMITATION OF MANAGEMENT TOP ACCOUNTING

BASED ON ACCOUNTING INFORMATION LACK OF KNOWLEDGE INTUITIVE DECISION NOT AN ALTERNATIVE TO MANAGEMENT TOP HEAVY STRUCTURE EVOLUTIONARY STAGE PERSONAL BIAS PSYCOLOGICAL RESISTENCE

Parminder Bajaj