ACCOUNTING FOR MANAGEMENT CONTROL

Accounting for Management Control

Accounting for Management Control

The common definition of management accounting can be so that management accounting is concerned with the efficiency of various phases of management. Management accounting emphasizes casual relationships between diverse causes and their effects. It provides a lot of information to the management to take effective decisions. Decision making is the vital function of the management and it is based to a greater extent on data supplied by accounting. In the complex business world of today traditional book keeping is not sufficient. In order to be of any help the financial information requires to be rearranged logically and relevantly it has to be converted into meaningful information so that further information can be gained. This task is performed by the management accounting. The work of management accountants starts when the work of financial accountants ends.

As the preparation of standard set financial accounts, balance sheet and profit and loss account is over the management accountant's analyses, arranges and selects useful data from the help of these financial records.

The Scope of Management Accounting

The scope of management accounting is very wide and the advantages which are gained through the adoption of management accounting are far better and durable tan the implementation of other methodologies. The fields which are related with the management accounting are as follows:

General accounting

Cost accounting

Internal financial control

Cost control procedures

Management accounting makes available useful information, which helps in planning and making decisions, but it is upto the management to what extent they can make use of the information provided by the management accounting.

Cost Accounting

Cost accounting forms an important branch of accounting it is a method of ascertaining cost to jobs, operation, various processes and products. It includes standards costing, marginal costing, differential and opportunity cost analysis.

Internal Financial Control

Management accounting includes the internal financial control methods such as internal audit and efficient office management coverage for all operating units.

Cost Control Procedures

Management accounting is widely used by the organizations because it includes cost control procedures. Cost control procedures are inventory control, cost control, budgetary control and various other analysis (Cost Control Resource List

http://www.nal.usda.gov/fnic/service/foodcc1.htm). The Accumulation of these factors helps the management accounting to better evaluate results for an organization and to better serve the organizations.

Standard costing

Marginal costing

Decision accounting

Financial Planning

Management accountants are now partners with other departments within an organization and engage in a wide variety of activities.

Role of Management Accountant in Exercising Effective Control

Accounting reports can assist in informing the organization about management policies and plans. Accounting information is often a basis for decisions.

Objectives of Business

Management accounting helps the organization to run on a platform which has been formulated by the management accountants with the use management accounting's tools and techniques.

Formulation of Cost Standards

A management accountant formulates cost standards so that the organization can gain benefit through the implementation of these standards. Management accountants are responsible to evaluate actual performances from the use of limited information, which is collected by the assessment of financial ...