Nature of Management Accounting

The Nature of Management Accounting

1. Management acounting is the process within an organization that provides information used by an organization’s managers in planning, implementing, and controlling the organization’s activities.

2. Management accounting provides some information that helps manager do their job:

a. Decision facilitating: information that help the manager to improve specific decision such set better price, to cut costs and to make better allocation of resoures.

b. Decision influencing: information that effects employee’s behaviours in positive ways such as motivates employees to make decision that the area the organization’s best interest.

3. Management accountant: the members of an organization who are responsible for the design and operation of the management accounting system.

4. The highest-level management acountant is called controler. In larger organization, the controler’s responsibility are primarily directed inward, to provide information that can be used within the organization by its manager.

5. Treasure responsible primarily outward-directed task, such as managing cash, obtaining funds from creditors and equity investors. And usually the responsibility of a separate finacial manager.

6. Management Accounting contrasted with Financial Reporting:

7. The most improtant similarity between financial and management accounting information is both are used in decision making.

8. Information from management accounting system is used for two quite different puposes:

c. The measurement of Full cost accounting:

* Direct cost: cost directly trace to the goods or services

* Indirect cost: a fair share of cost incurred jointly in producing these and other goods or services.

Company often uses this full cost plus profit margin in deciding what price to charge for its goods and service.

d. Control

* Measure costs by responsibility centers (organization unit headed by...