Nội dung text Unit-1-Management Accounting.pdf
GOVERNMENT FIRST GRADE COLLEGE ANKOLA B.COM VI SEMESTER DISCIPLINE SPECIFIC COURSE PRINCIPLES OF MANEGEMENT ACCOUNTING Compiled from various online sources by: Satishkumar N Mahale, Assistant Professor, Department of Commerce-Gfgc Ankola UNIT-1 Introduction: Meaning and definitions, features, objectives, functions and significance of management accounting; financial accounting v/s management accounting; cost accounting v/s management accounting; principles of management accounting; techniques of management accounting; installation of management accounting system. 1.1 Introduction In today’s complex business environment a manager has to take timely and good decisions to lead the business into profits and by having competitive edge over its competitors, consolidates the financial positions of the business organization and in this way he not only runs the business efficiently and effectively but also fulfills the corporate social responsibility towards various stakeholders of the business such as owners, managers, employees, bankers, creditors, customers, Govt., and society, etc. The decisions can be good only if they are based on true, fair and timely information. If the decisions arenot based on correct information or no information then there are chances of having them as wrong decisions. Hence every good organization has an information system to assist the management atdifferent levels in decision making by providing information from various sources. 1.2 Meaning Management Accounting which is also known as Accounting for Managers is a process of collecting information (both qualitative and quantitative) from various sources such as Financial Accounting, Cost Accounting, Tax Accounting, Human Resource Accounting, etc. selecting the important ones out of the total, analyzing
them with the help of certain tools or techniques and then pass on to the management fortaking decisions in the interest of the organization and the parties interested into it. Therefore it can be said that the Management Accounting is selective in nature where only important information are supplied to the management which have been collected from different sources. The management takes both routine and strategical decisions with the help of the information. Actually the ManagementAccounting works two ways – one the management is capable of knowing each and every thing about itsorganization, finds out the strong and weak points and accordingly takes decisions for grabbing the opportunities available to the organization in the external environment by facing the challenges and on the other hand the performance of the management can also be evaluated by various stakeholders during a particular time period by going through the financial statements of the organization. 1.3 Definition The Management Accounting has been defined by various scholars/authorities from time to time. The following are some important definitions of Management Accounting: • The Institute of Chartered Accountants of England and Wales. “Any form of accounting which enables a business to be conducted more efficiently can be regarded as Management Accounting”. • Anglo-American Council on Productivity. “Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day to day operation of any undertaking”. • R,N. Anthony. “Management Accounting is concerned with accounting information that is usefulto management”. • J. Batty. “Management Accounting is the terms used to describe the account methods, systems and techniques which, coupled with special knowledge and ability, assist management in the task