Management Accounting Essay

2532 Words 11 Pages
From the management accounting viewpoint of business, the process of decision-making is the main aim of management accounting. The way of how accountants make their decisions has been studied and investigated widely. It is very helpful in management accounting to categorize decisions in to strategic and tactical and in to short run and long run decisions.
The objective of management accounting is to make a good decision as the process of management decision-making is extremely subjective. A good decision is depends on the aims and purposes of management. As a result, the management has to set the aims and purposes in order to make decisions. For instance, the management is required to decide strategic aims such as the pricing strategy,
…show more content…
The entire tools are regarded as mathematical models of decision-making.
For instance, the base of C V P analysis is the equation: I = P (Q) - V (Q) - F.
The above tool is relating to employing and using financial statements as a check list to recognize and discover decision-making fields and also it is used to find the most proper and suitable management accounting technique. There is one or more proper management accounting technique for each item on financial statements.

2.2 Financial Statements
Financial statements or what also called financial reports are formal documents of financial activities of business. Financial statements are regularly called as accounts in some law companies. In both short and long term, financial statements can offer a summary of a business' financial situation. There are four major financial statements. First one is Balance sheet which also called as statement of financial situation or condition. Balance sheet is a report on a company's assets, liabilities, and net equity as of a given point in time. Second basic is income statement which also called Profit and Loss statement or a "P&L". Income statement is a report of company's expenses, income and profits over a period of time. Third basic is taxes which are financial charges imposed by a state on an individual or on a legal entity.Fourth one is Statement of cash flow which is report on a
Open Document