the evolution of management accounting

Topics: Management accounting, Cost accounting, Management Pages: 22 (7369 words) Published: December 6, 2013
This paper starts with introducing importance of management accounting literature and reviews the historical development of cost accounting from 1850 through 2000, includes origin of management accounting and controlling practices. In addition it identifies the management accounting theoretical development, and the main critiques that shapes the development of management accounting, thus creating a ground for future research or reviews. As well as it presents challenge existed in the field and concludes by advocating field-based research to discover the innovative practices being introduced by organizations successfully adapting to the new organization and technology of manufacturing. 1. Introduction

1.1 Importance of knowing the literature
A wealth of literature exists regarding the historical development and evolution of management accounting so accountants have many reasons to study this literature. It helps them to understand the sources of many of today's practices; it leads to rediscovery of old ideas that have been lost. It enables one to support proposal with past writings quoting from an important work and can help them to sell a proposal or give credence to an idea. As with study of any literature, it provides accountants with opportunities to improve their verbal abilities, both written and oral and familiarizes accountants with the intellectuals and innovators who have shaped how account proactive their profession in addition it illustrates the state of the professionalism of the field and leads them to an awareness of the controversial topics in the field. Most solid management accounting evolution researchers were: Solomons ((1954); Chatfield (1977); Chandler (1977); Parker (1980); Johnson & Kaplan (1987) ; Hopwood (1987); Hockin & Marcve (1988); Loft, (1995); Okano & Suzuki (2007) cited on (Darius Gliaubicas (2012)). This term paper tries to present summary of evolution of management accounting in regions that had the largest impact on the process. 2. Summary of Historical Development of Cost Accounting

In terms of accounting development, railway companies started register cost information in accounts (Chandler, 1977 cited on Darius Gliaubicas (2012)) and also Chandler [1977, pp. 109-120](cited on Robert Kaplan 1984) provides evidence of how U.S. railroads, in the 1860s and 1870s, developed accounting procedures to aid them in their extensive planning and control procedures. Railroads handled a vastly greater number and dollar volume of transactions than had any previous business and, as a consequence, had to devise procedures to record and summarize an enormous number of cash transactions. These procedures also generated summary financial reports on the operations of the many sub-units within the large, geographically dispersed railroad companies. In addition to the financial summaries, the railroads developed a system of reporting operating statistics for evaluating and con-trolling the performance of their sub-units. Statistics such as cost per ton-mile and the operating ratio (operating in-come divided by sales) were routinely reported for various sub-units and classes of service. Later in the 1880s, the newly formed mass distribution [Chandler, 1977, Chapter 7(cited on R.kaplan1984)] and mass production enterprises adapted the internal accounting reporting systems of the railroads to their own organizations. The nationwide wholesale and retail distributors produced highly detailed data on sales turnover by department and by geographic area, generating performance reports very similar to those that would be used 100 years later to monitor the performance of revenue centers in the firm. Mass production enterprises formed in the 1880s for the manufacture of tobacco products, matches, detergents, photographic film, and flour. Most important was the emergence of the metal-making and fabricating industries. Andrew Carnegie's steel company was a particularly good example of the...

Bibliography: M .Shotter (1999): ‘the origin and development of management accounting’, Meditari AccountancyResearchvol.71 999:p .209-235 accessed on 24 November2013
Johnson, H
Harvard Business School Press
Darius Gliaubicas(2012): ‘the research of management accounting evolution’, Vilnius University, Lithuania, journals of economics and management 2012:17(1)p 22-28 accessed on 24 November 2013
International federation of accountants (IFAC), (1998). International management accounting practice statement:
Management accounting concepts
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