MANAGEMENT ACCOUNTING -An Introduction

Transcript:MANAGEMENT ACCOUNTING -An Introduction:
MANAGEMENT ACCOUNTING -An Introduction Dr.S.BELLARMIN DIANA ASSISTANT PROFESSOR PG & RESEARCH DEPARTMENT OF MANAGEMENT STUDIES BON SECOURS COLLEGE FOR WOMEN, THANJAVUR. INRODUCTION Accounting serves the purpose of providing financial information relating a business. Such information is provided to people who have an interest in the organization On the basis of type of accounting information and the purpose for which such information is used, accounting may be divided into three categories: Financial Accounting Financial accounting is mainly concerned with recording business transactions in the books of accounts for the purpose of presenting final accounts, i.e., Profit & Loss account - showing the net profit or loss during the period Balance Sheet - showing the financial position of the firm at a point of time. The objective of financial accounting is to provide information to external parties such as shareholders, creditors, employees, potential investors, government agencies, etc. Cost Accounting Cost accounting is a branch of accounting which specializes in providing information about the detailed cost of products or services being supplied by the undertaking. The information supplied by cost accounting acts as a tool of management for making optimum use of scarce resources and ultimately-add to the profitability of business. Cost accounting information is mainly for internal use i.e. management. It is not to be provided to external parties such as shareholders, creditors, potential investors, etc. Management Accounting It is concerned with all such accounting information that is useful to management. In simple words, the term management accounting is applied to the provision of accounting information for management activities such as planning, controlling and decision-making, etc. It serves as a decision support system to all levels of management. DEFINITION According to National Association of Accountants (USA), management accounting is "the process of identification, measurement, accumulation, analysis, preparation and communication of financial information used by management to plan. evaluate and control within the organization and to assure appropriate use and accountability for its resources. DEFINITION In the words of Robert Anthony, "Management accounting is concerned with accounting information that is useful to management.“ The Institute of Cost and Works Accountants of India (ICWAI) has defined management accounting as "a system of collection and presentation of relevant economic information relating to an enterprise for planning, controlling and decision making." OBJECTIVES To assist the management in promoting efficiency To prepare budgets covering all functions of a business To analyze monetary and non-monetary transactions To compare