Accounting Theory And Management Accounting

2580 Words11 Pages
Though forms of managerial accounting practices can be traced back decades, centuries even, management accounting used to be regarded as a financial tool, advantageous for the financial managers. However, over the past three decades views on management accounting have changed. As Kaplan (1994) states management accounting theory has experienced a revolution in both theory and practice with the development of new innovations. Through advances in information technology, more competitive markets and different organizational structures the environment for management accounting has changed (Burns & Scapens, 2000). With the emergence of new techniques such as activity-based cost (ABC) management and performance measurement through the balanced scorecard, management accounting has moved away from its former function as just a financial management tool. In modern organizations, management accounting practices can be found throughout the organization, useful to managers from all different sectors. It allows for better informed decisions during the conception of a new product and lends itself for better understanding of the production process, both from a costing perspective, as well as a pricing one, to name a few. During the last decades a complementary relationship has been revealed between management accounting and other management accounting functions, often referred to in research as the use of Edgeworth’s theorem of complementarities (Laursen & Foss, 2003). This essay attempts
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