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Objectives of Management Accounting

OBJECTIVES OF MANAGEMENT ACCOUNTING

The ultimate objective of the Management Accounting is to help the management in order to maximize profits or at least minimize expenses and control the losses. The foremost objective of management accounting is to assist the management to carry on an effective functioning of the: overall managerial activities. A few objectives of the management accounting can be summarized as follows.

  1. To assist in planning and formulating future policy. Planning is one of the      important functions of the business management. It includes proper analysis of     available data and forecast on the basis of available information. It facilitates the      preparation of statement in the light of past result and gives future estimation.
  2. To guide the interpretation of financial statements. Management accounting       provides guidance for analyzing and interpreting the various financial statements. Through this way, business executives, investors, creditors, and employees of the      organization are enabled to obtain required information.
  3. Helps in decision making. Management accounting assists in decision making         process in an efficient manner with the help of the various alternative information which are available with regard to cost and revenue. Under this aspect, all the available data are analyses and correct decision may be taken with the help of the management accounting
  4. Assists in organizing. Management accounting emphasizes on budgetary control,      marginal costing, standard costing, cash flow, and fund flow analysis. All the above areas require an intensive study of the firm. It assists in rationalizing the organization  structure of the business concern in an efficient manner.
  5. To assist in controlling. Some of the control techniques such as standard costing, Budgetary control are helpful controlling performance. Management accounting is one of the tools for managerial control.
  6. To help in effective communication of information. Management accounting provides a means of communicating management plans and programmers through the organization. It is a vital part of the organization’s management information   system.
  7. Helps motivating employees. Management accounting assists the management by providing a continuous motivation to their employees.
  8. Assistance in co-ordination. Co-ordination refers to a Co-ordial and harmonious relationship maintained by the manager in an organisation. Management       accounting is concerned with the efficiency of various phases of management. It      helps in overall control and effective co-ordination of business operations.