What is Management Accounting
Management accounting is concerned with providing information to managers – that is, people inside an organisation who direct and control its operations. (Management Accountin Seal et al) It provides very important information that businesses need to operate efficiently and accounts that accurately show financial information that managers need to make decisions in the best interest of the business. In this essay there will be an assessment on the claim that putting measures on human accountability is vital to getting things done and running an M-form business. I will base this on my readings of the visible hand by Chandler, the understanding of modern management by Hoskin and Macve and finally management accounting by Seal et al. The roll of management accountants involves processing and purchasing departments may report to the managerial accountant. Financial reports regarding taxes, shareholder payments, capital expenditures, banking activity, payroll and benefits are regularly reviewed by the managerial accountant. Following the review, reports are passed on to appropriate department managers. Furthermore the Managerial accountant may also create in-house financial and accounting systems. This enhances their ability to provide more precise forecasting and develop alternatives for increasing profits or reducing expenditures. Developing a unique system also can result in increased industry knowledge, making the accountant a more valuable asset to the company.
‘Management accounting has a strong future orientation’ (management accounting Seal et al) There is always going to be a change in the needs and demands of customers, within the economic climate and so there is a lot pressure on managers to make plans on estimates of what they think may happen in the future in order to allocate funds adequately. In comparison to financial accountants management accounting puts much less emphasis on the precision of their estimates , this is because trying to get the estimate of prices precise down to the penny is extremely time and resource consuming . Furthermore management accounting place more emphasis on non-mandatory information and this type of information can be extremely difficult to express in terms of monetary value. E.G. customer sastifaction with a new product line. The primary emphasis is of management accounting is for all of its reporting to be done on separate sections of the business that prove they can function on their own as an individual business with its own top managers. An important issue that Seal et al draw on in management accounting is that management accounting is not mandatory as there are no outside governing bodies that specify any rules and regulations about how management accounting should be carried out. ‘Decentralisation is the deligation of decision making authority throughout an organisation’ (Management Accouting, Seal et al) decentralisation is especially important to m-form businesses because it gives managers at different levels of the business the power to make decisions on the particular field they’re working in, rather than having one general manager whom makes decisions for all of the departments based on his knowledge of what ever particular field he may specialise in. In the visible hand Chandler explains the begging of modern day management in America Traditionally American businesses were a single unit business enterprise that was normally ran by a small group of people who originally owned a means of production i.e a bank or factory. These types of firms usually only handled one type of economic function. Whereas modern day business enterprise has a hierarchy of well paid top and middle managers. Chandler stated that the initial form of management accounting only started in a few industries where technological innovation and market growth created high speed and high volume throughput. ‘As technology became more...
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