Tools & Techniques of Management Accounting

Tools & Techniques of Management Accounting

1. Tools & Techniques of Tools & Techniques of
Management AccountingManagement Accounting

2. Financial Policy and AccountingFinancial Policy and Accounting
•Firms has to take decisions about sources of
raising funds.
•Issue of share capital or raising of loans.
•Proportion between share capital and loans are to
be decided.
•Management accounting provides techniques for
financial planning.

3. Analysis of Financial StatementsAnalysis of Financial Statements
•Means to classify and present the financial data
useful for the management.
•Financial analysis includes comparative financial
statements, ratios, fund flow statements, trend
analysis etc.

4. Historical Cost AccountingHistorical Cost Accounting
•The price of an asset on the balance sheet is based
on its nominal or actual cost when acquired by the
company is known as historical cost accounting.
•Actual cost is compared with standard cost to get
an idea about performance of the concern.

5. Budgetary ControlBudgetary Control
•It is a system which uses budgets as a tool for
planning and control.
•Budgets for all departments are prepared in
advance.
•Actual performance is compared with the pre-
determined targets.
•Helps to asses the performance of each and every
persons in the organisation.

6. Standard CostingStandard Costing
•Here costs are determined in advance.
•Actual cost are recorded and compared with the
standard costs.
• Variances are analysed and their reasons are
ascertianed.
•It helps to enhance the efficiency of the concern.

7. Marginal CostingMarginal Costing
•Method of costing concerned with changes in
costs resulting from changes in the volume of
production.
•It is helpful for measurement of profitability of
different lines of production, different
departments and divisions of an enterprise.

8. Decision AccountingDecision Accounting
•Decision making is an important work of
management.
•It involves a choice from various alternatives
•Management Accounting calculates financial
implications of each alternative course of action
and helps management to select best course of
action

9. Revaluation AccountingRevaluation Accounting
Also known as Replacement Accounting
Batty defines Revaluation accounting as,
“It is used to denote the methods employed for
overcoming the problems connected with fixed
asset replacement in a period of rising prices”

10. Control AccountingControl Accounting
•It is not a separate accounting system.
• It is the methods and procedures that are
implemented by a firm to help ensure the validity
and accuracy of its own financial statements.
•In controlling accounting we can use internal
check, internal audit, statutory audit.

11. Management Information SystemManagement Information System
•It is a computerized database of financial
information organized and programmed in such a
way that it produces regular reports on operations
for every level of management in a company.
•Data planning is supplied to management
•Feedbacks are recieved