Nature and Purpose of Management Accounting

1248 WordsAug 30, 20105 Pages
The primary role of management accounting is to information in a timely manner to the company’s provide relevant management to help them plan and control the activities of the organization and with which optimal and sound decisions can be made. All the topic areas examined relate to this primary role. Although this role and its related topics covered are clearly understood by most, if not all candidates or even managers in the organizations, different types of relevant information are needed for different organizations at different times for different situations and purposes. Therefore business skills and sense are often required when tackling organizational problems along with good analytical and writing skills.…show more content…
This provides the necessary rapidity to management accounting data which generally reflects the expected future , and hence could only be an estimation. This provides the necessary rapidity to management accounting information. The periodicity in reporting financial accounts is much wider than in the case of management accounting. In financial accounting, generally results are reported on year to year basis. In management accounting, weekly, fortnightly and even monthly reporting is used. PURPOSE OF MANAGEMENT ACCOUNTING The purpose of management accounting is to provide managers with financial and statistical information which will help them carryout their responsibilities. The accounting system is the major quantitative information system in almost every company and it should provide information for three broad purposes. 1. Internal reporting to managers , for use in planning and controlling routing operations. 2. Internal reporting to managers ,for use in making non-routine decisions and in formulating majors plans and policies. 3. External reporting to stockholders, government and other outside parties for use in investors decisions, income tax collections, and a variety of other applications. The third purpose, external reporting, emphasizes the historical custodial and stewardship aspects of accounting. This area is usually
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