Prestige institute of management accounts ppt
Published on: Mar 4, 2016
Transcripts - Prestige institute of management accounts ppt
PRESTIGE INSTITUTE OF MANAGEMENT
SCOPE ,FUNCTIONS,IMPORTANCE AND DISADVANTAGES OF MANAGEMENT
SUBMITTED TO- SUBMITTED BY-
DR. AMITABHA MAHESHWARI POOJA SHRIVAS
Management Accounting is the process of measuring and reporting
information about economic activity within organizations, for used by
managers in planning, performance evaluation, and operational control.
Management accounting is the process of identification, measurement,
accumulation, analysis, preparation, interpretation and communication
of information that assists managers in specific decision making within
the framework of fulfilling the organizational objectives.
NATURE OF MANAGEMENT ACCOUNTING
The term management accounting is composed of ‘management’ and
‘accounting’. The word ‘management’ here does not signify only the top
management but the entire personnel charged with the authority and
responsibility of operating an enterprise.
The task of management accounting involves furnishing accounting
information to the management , which may base its decisions on it .
SCOPE OF MANAGEMENT ACCOUNTING
Financial Accounting- Management Accounting is mainly concerned with the
rearrangement of the information provided by financial accounting.
Cost AccountingAccounting - Standard costing , marginal costing , opportunity
cost analysis play a useful role in operation and control of the business
Revaluation Accounting - This is concerned with ensuring that capital is
maintained intact in real terms and profit is calculated with this fact in mind.
Budgetary Control- This includes framing of budgets , comparison of actual
performance with the budgeted performance, computation of variances,
finding of their causes, etc.
Inventory Control - It includes control over inventory from the time it is
acquired till its final disposal.
FUNCTIONS OF MANAGEMENT
Provides Data – Management Accounting serves as a vital source of data for
Modifies Data- The accounting data required for managerial decisions is
properly complied and classified.
Analyses and Interprets Data- The accounting data is analyzed meaningfully
for effective planning and decision making. For this ratios are calculated and
likely trends are projected.
Facilitates control- Management accounting helps in translating given
objectives and strategy's into specified goals for attainment by a specified
IMPORTANCE OF MANAGEMENT
Determination of Aim-Management accounting on the basis of the information
available determines its goal and tries to find out the route through which it can
reach the gaol.
Helps in the preparation of plan- Present age is the age of planning .That producer
is considered as most successful producer who produces articles according to the
plan and needs of the consumer. Before taking any plan the manager must study
and analyze the present and future of the business.
Better services to customers- The cost control devices is mgt accounting enables
the reduction in prices of the product. The customers are supplied goods with
quality at reasonable price.
Easy to take judgment- The mgt can decide which plan or policy is good from the
Measurement of performance- The actual and the standard performance can be
DISADVANTAGES OF MANAGEMENT
Management accounting can be an effective tool for business planning, strategic
development and internal monitoring. At same time, there are potential problems
that can arise by relying exclusively on management accounting information.
Few of them are:-
Lack of Standardization- Financial accounting is highly standardized with financial
accountant using guidelines such as GAAP. Management accounting does not have a
set of standard procedures.
Over-emphasis on Quantitative information- Quantitative data can be valuable in
making informed business decisions. Management accounting, focuses exclusively
on quantitative measures and ignores factors that cannot be measured in dollars
Subjectivity- Management accounting allows for a great deal of subjectivity when
creating methods for measuring performance.
LIMITATIONS OF MANAGEMENT
Limitations of basic records- Management accounting derives its information
from financial accounting , cost accounting and other records.
Persistent efforts- The conclusions drawn by the management accountant are
not executed automatically. S/He has to convince people at all levels.
Wide scope- Management accounting has a very wide scope incorporating
many disciplines. It considers both monetary as well as non-monetary
Top-heavy structure-The installation of mgt accounting system requires heavy
costs on a/c of an elaborate organization and numerous rules and regulations.