Introduction to management accounting

For running any business activities resources are needed. The business activities are: Production, sales, planning and huge capital investment. The nature and scope of business have considerably changed. Finance helps in conducting business activities smoothly. In the days past, things were no so as these are today, the large scale business which needs huge capital investment long tun planning and low level of accounting which was confined to know the operation result after a specific period generally after a year, to know the financial position of the organization.

The change of nature and scope of business the Accounting System has gone considerable change. The accounting in modern times is a branch of providing various information needed for decision making such as: make or buy, close or continue work by man or machine, be purchased or on lease etc. In this chapter, an effort is made to explain the salient features of management accounting which provides a useful aid to management.

Q.1: Define the term ‘Management Accounting’. Discuss its features and importance.

Answer: Management accounting is the decision-making accounting. It presents data in such a way so as to help management in policy-framing and day to day running of the Organization. Management Accounting refers to accounting for the management i. e. accounting which provides necessary information to the management for discharging its functions. These functions are: planning, organizing. …

Q.1: Define the term ‘Management Accounting’. Discuss its features and importance. Read More »

Q. 3. What is the scope of management accounting? What are the main differences between management, financial and cost accounting ?

Answer The scope, tools and techniques of management accounting are as under: 1. General Accounting. The general accounting records, external transactions covering cash receipts and payments, liabilities and setting up of sales and receivables. It also covers preparation of regular financial statements which are prepared from various account balances. 2. Cost Accounting. It consists of the application …

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Q. 2. What are the important functions of Management Accounting? Discuss limitations of management accounting.

Answer: The main functions of Management Accounting are summarised as: 1. Useful in Planning. Management accounting is very useful in planning. Before planning management has to evaluate past and future strategy. The Management Accounting provides past data on the basis of which future line of action can be chosen. 2. Decision-making functions. Before taking up …

Q. 2. What are the important functions of Management Accounting? Discuss limitations of management accounting. Read More »

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