The Function of Management Accounting in a Law Firm

2166 WordsNov 15, 20109 Pages
1.0 Introduction Management accounting is the application of professional knowledge and skill in the preparation of accounting information in such a way as to control the operations of an undertaking. It is the presentation of accounting information in such a way as to assist management in the creation of policy for the day-to-day operation of an undertaking as it provides information needed by managers to determine how resources should be obtained and used. It includes the methods and concepts necessary for effective planning in order to be able to choose from alternative business decisions. This term paper is concerned with how management accounting discipline has been used in the law firm of Messrs Majanja Luseno Advocates,…show more content…
Management is able to make assessment of quality of personnel, quality of customers e.t.c. and this information will in turn be made use of by the management for the formulating of its policies and programs. vii. Decision making - Tactical and strategic decisions are taken by the management for day-to-day functioning of the organization. Decision such as expand, own or lease or hire, discontinuance of a department, modification and diversification of business, merge or not to merge are crucial ones that can only be implemented with management accounting techniques. The presentation of accounting information in a condensed and lucid form like funds flow statements, help management in drawing suitable inferences for decision making. viii. Performance appraisal - Budgetary control and standard costing help management in evaluating the performance of different departments, centers, persons e.t.c. ix. Organizing - The human and non-human resources in the Firm are analyzed and measured. The ratio of total profits as a percentage of net sales, capital employed and partner’s funds judge efficiency. Management accounting techniques like standard costing and internal audit enable management to examine each department separately. x. Motivation - The setting of goals, planning and the measurement of performance in the Firm increases its effectiveness thereby
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