Nature and Purpose of Management Accounting

Topics: Management accounting, Association of Chartered Certified Accountants, Chartered Certified Accountant Pages: 4 (1248 words) Published: August 30, 2010

The primary role of management accounting is to information in a timely manner to the company’s provide relevant management to help them plan and control the activities of the organization and with which optimal and sound decisions can be made. All the topic areas examined relate to this primary role. Although this role and its related topics covered are clearly understood by most, if not all candidates or even managers in the organizations, different types of relevant information are needed for different organizations at different times for different situations and purposes. Therefore business skills and sense are often required when tackling organizational problems along with good analytical and writing skills. Management accounting deals with information that is not generally disseminated outside a company, such as salary cost, profit targets and cost of materials per unit produced. Whereas the general purpose financial statements of financial accounting are assumed to meet the basic information needs of most external users, managerial accounting provides a variety of specialized reports for division managers, departmental heads, project directors, section supervisors and other managers within the company. NATURE OF MANAGEMENT ACCOUNTING

Management accounting includes financial accounting and extends to the operation of a system of cost accounting and financial management. While meeting the legal and conventional requirements regarding the presentation of financial statements(Profit and loss account, balance sheet and fund flow statement)it stresses upon the establishment and operation of internal controls. The nature of management accounting can be well understood by comparing management accounting with financial accounting. It should be clear that management accounting is intended for internal use by managers and employees who make decisions that affect the organizations future. In contrast financial accounting is intended primarily...
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