Management accounting

1. MANAGEMENT ACCOUNTING PRESENTED BY T.SRUTHI PGDM-10036

2. MANAGEMENT ACCOUNTNG DEFINED Management accounting is the presentation of accounting information in such a way so as to assist management in the creation of policy and in the day-to-day operations of an undertaking.

3. objectives To assist the management in promoting efficiency. To interpret financial statements to enable the management to formulate future plans. To arrange for the systematic allocation of responsibility for implementation of plants and budgets.

4. objectives To analyze monetary and non monetary transactions. To compare the actual performance with plan & identifying deviations and their causes. To prepare budget covering all functions of business.

5. Need and importance of management accounting Creates harmony between the management & employees. Enables the management to improvise its services to its customers. Various operations can be planned with the help of accounting information, budgeting & forecasting. Avoid business from facing seasonal fluctuations. Helps in communicating up to date information to various parties interested in successful working of the business organization.

6. Need and importance of management accounting The use of management accounting may controlled or even eliminate various types of wastages. The management aims to control the cost of production and at the same time increase efficiency of employers. Different tools of management accounting have provided validity, objectivity & reliability in business management.

7. Functions 1.Forecasting Making shorterm & longterm finance and planning the business for future operations. 2.Organising Organising the human & physical resources of the business. 3.Coordinating Providing different tools for coordination.

8. Contd.. 4.Controlling Controlling performance by using standard costing, marginal costing and budgetary control. 5.Analysis and interpretation 6.Communicating 7.Economic appraisal Appraisal of social & economic forces, govt. policies and interpret their effect on business.

9. SCOPE OF MANAGEMENT ACCOUNTING Management accounting is concerned with presentation of accounting information in the most useful way for the management. Its scope is, therefore , quite vast and includes within its fold almost all aspects of business operations. Financial Accounting: Management accounting is mainly concerned with the rearrangement of the information provided by financial accounting. Hence, management cannot obtain full control and coordination of operations without a properly designed financial accounting system.

10. Contd. Cost Accounting: Standard costing, marginal costing, opportunity cost analysis, differential costing and other cost techniques play a useful role in operation and control of the business undertaking. Revaluation Accounting: This is concerned with ensuring that capital is maintained intact in real terms and profit is calculated with this fact in mind. Budgetary Control: This includes framing of budgets, comparison of actual performance with the budgeted performance, computation of variances, finding of their causes, etc .

11. Contd. Inventory Control: It includes control over inventory from the time it is acquired till its final disposal . Statistical Methods: Graphs, charts, pictorial presentation, index numbers and other statistical methods make the information more impressive and intelligible . Taxation: This includes computation of income in accordance with the tax laws, filing of returns and making tax payments.

12. LIMITATIONS OF MANAGEMENT ACCOUNTING Based on accounting information Wide scope-leads to inaccurate results Costly-installation Evaluationery stage Opposition to change- rearrangement of rules and regulations maynot be liked by people.

13. Who is Management accountant? The officer who is concerned with management accounting function in an organization is known as management accountant.

14. Functions of management accountant To assure physical protection for the business through internal control & proper insurance coverage. To consult with all segments of management. To administer the tax policies & procedures To supervise & coordinate preparation of reports to govt. agencies. To compare performance with operating plan & standards & to report and interpret the results of operations to all levels of management and owners of business as well.

15. Functions of management accountant To establish, coordinate, administer an integral part of management, an adequate plan for the control of operations. To continuously appraise economic & social forces & govt. influences and interpret their effect on business.

16. Duties of a management accountant To maintenance of adequate records of all contracts and leases. The preparation as a budget director, in conjunction with other officers of an annual budget, covering all activities of the corporation for submit to board of directors prior to the fiscal year. The preparation & interpretation of all statistical records & reports of the corporation. The costing of all physical inventories. The compilation of production costs. Continuous audit of all accounts & records of the corporation wherever located.

17. Contd. The compilation of costs of distribution. The installation & interpretation of all accounting records of the corporation. The preparation & interpretation of the financial statements & reports of the corporation.