MANAGEMENT ACCOUNTING

The process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals.

DEFINATION
According to the Institute of Management Accountants (IMA): "Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy"

FEATURES/ NATURE

primarily forward-looking, instead of historical; model based with a degree of abstraction to support decision making generically, instead of case based; designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators; usually confidential and used by management, instead of publicly reported; computed by reference to the needs of managers, often using Management information system, instead of by reference to general financial accounting standards.

Scope

Comparative Financial statements Ratio Analysis Fund Flow Analysis Trend Analysis CVP Analysis Cash Flow Analysis Budgetary Control Standard Costing Marginal Costing Responsibility Accounting Price level Accounting Human resource Accounting Social Cost Benefit Analysis

Functions

Planning and forecasting Modification of data Interpretation of data Management control function Communication Risk Assesment Allocation of resources

Limitations

Based on accounting information Lack of Knowledge Intuitive decisions Not an alternative to administration Top heavy structure Evolutionary state Personal bias Psychological resistance.