Mineral Based Industrie
Roll No. 521117331
Name Chander Shekher
ASSIGNMENTS
M.Com – 3rd Semester
Subject Name: Management Accounting
Subject code: MCC 304
Q1 What are the limitations of management accounting
Answer
Limitations of Management Accounting
Management accounting, being comparatively a new discipline, suffers from certain limitations, which limit its effectiveness. These limitations are as follows:
(i) Limitations of basic records: Management accounting derives its information from financial accounting, cost accounting and other records. The strength and weakness of the management accounting depends upon the strength and weakness of these basic records. In other words, their limitations are also the limitations of management accounting.
(ii) Persistent efforts: The conclusions drawn by the management accountant are not executed automatically. He has to convince people at all levels. In other words, he must be an efficient salesman in selling his ideas.
(iii) Management accounting is only a tool: Management accounting cannot replace the management. It is only an adviser to the management. The decisions regarding implementing his advice are to be taken by the management. There is always a temptation to take an easy course of arriving at a decision by intuition rather than going by the advice of the management accountant.
(iv) Wide scope: Management accounting has a very wide scope incorporating many disciplines. It considers both monetary as well as nonmonetary factors. This all brings inexactness and subjectivity in the conclusions obtained through it.
(v) Top-heavy structure: The installation of management accounting system requires heavy costs on account of an elaborate organization and numerous rules and regulations. It can, therefore, be adopted only by big concerns.
(vi) Opposition to change: Management accounting demands a breakaway from traditional accounting practices. It calls for a rearrangement of the personnel and their activities which is generally
Name Chander Shekher
ASSIGNMENTS
M.Com – 3rd Semester
Subject Name: Management Accounting
Subject code: MCC 304
Q1 What are the limitations of management accounting
Answer
Limitations of Management Accounting
Management accounting, being comparatively a new discipline, suffers from certain limitations, which limit its effectiveness. These limitations are as follows:
(i) Limitations of basic records: Management accounting derives its information from financial accounting, cost accounting and other records. The strength and weakness of the management accounting depends upon the strength and weakness of these basic records. In other words, their limitations are also the limitations of management accounting.
(ii) Persistent efforts: The conclusions drawn by the management accountant are not executed automatically. He has to convince people at all levels. In other words, he must be an efficient salesman in selling his ideas.
(iii) Management accounting is only a tool: Management accounting cannot replace the management. It is only an adviser to the management. The decisions regarding implementing his advice are to be taken by the management. There is always a temptation to take an easy course of arriving at a decision by intuition rather than going by the advice of the management accountant.
(iv) Wide scope: Management accounting has a very wide scope incorporating many disciplines. It considers both monetary as well as nonmonetary factors. This all brings inexactness and subjectivity in the conclusions obtained through it.
(v) Top-heavy structure: The installation of management accounting system requires heavy costs on account of an elaborate organization and numerous rules and regulations. It can, therefore, be adopted only by big concerns.
(vi) Opposition to change: Management accounting demands a breakaway from traditional accounting practices. It calls for a rearrangement of the personnel and their activities which is generally