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Management Accounting

INTRODUCTION

Financial accounting had started at an earlier times along with the development of trade activities. The ultimate aim of the financial accounting is to supply financial information to the outsiders and also to prepare final account. But it could not supply the valuable information to the management. The development of company type of organization has resulted in a wider economic activity and separation of ownership and management. At present, our life style has become faster, technological changes taking place day by day, economic and social values being obsolete within a day. Under this situation, the management is not ready to wait up to the end of the one financial year regarding the problems arising from day-today transactions. The accurate information regarding the business transaction must be collected from week to week or month to month. In order to fulfill the above activities in an efficient manner, a separate system of accounting is developed. It is popularly known as Management Accounting.

MEANING

The term Management Accounting refers to accounting for the management i.e., accounting which provides necessary information to the management for discharging its functions. In other words, any system of accounting which helps the management to carry out the operational activities of a concern more effectively is termed as Management Accounting.

The term Management Accounting is of recent origin even in the USA. Management Accounting has developed into a full-fledged subject, distinct from accounting in the present commercial and financial world. It is otherwise known as management-oriented accounting or accounting for management.

DEFINITION OF MANAGEMENT ACCOUNTING

Some definitions of Management Accounting are as follows.

“Any form of accounting which enables a business to be conducted more efficiently can Be  regarded as Management Accounting”.

-Institute of Chartered Accountants of England 

Such of its techniques and procedures by which accounting mainly seeks to aid the management collectively have come to be known as Management Accounting. “ 

-Institute of Chartered Accountants of India

“Management Accounting is the adaptation and analysis of accounting information and its diagnosis and explanation in such a way as to assist the management.”-T.G. Rose

“Management Accounting is concerned with accounting information that is useful to management. ” -Robert N. Anthony

SCOPE OF MANAGEMENT ACCOUNTING

The scope of Management Accounting is very wide as to comprise an investigation of all the aspects and branches of business operations. The following are some of the areas of specialization included within the orbit of Management Accounting.

(i)                 Financial Accounting

(ii)               Cost Accounting

(iii)             Budgeting and Forecasting

(iv)             Statistical Data

(v)               Cost Control Technique

(vi)             Taxation

(vii)           Methods and Procedure

(viii)         Internal Financial Control

(ix)           Office services