INTRODUCTION Accounting is an ancient art as old as money itself, however, the role of accounting has been changing with

the economic and social developments. The traditional view of accounting as a historical description of financial activities is no longer acceptable. Over a period of time new dimensions have been added to the discipline of accounting. Until recently accounting was regarded merely as an art of recording, classifying and summarising transactions and events which are of a financial character. Later on, accounting was regarded as "the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information." Accounting is now regarded as a service activity the function of which is to provide quantitative infomation about economic activities. The infomation is primarily financial in nature and is intended to be useful in making economic decisions. Thus, accounting can be rightly termed as a service activity, 'a descriptive, analytical discipline, and an information system.' It includes several branches, for example, financial accounting, cost accounting and management accounting.

Financial accounting IT is concerned with recording transactions and preparing financial and other reports to be used internally by management and externally by investors, creditors, potential investors, and government agencies.

Management accounting It is primarily concerned with providing information for use by people within the organisation, i.e. the managers, rather than for use by people outside the organisation.

Cost Accounting The branch of accounting that is concerned with collection, determining and controlling costs of products and services is called cost accounting.

DEVELOPMENT OF ACCOUNTING The accounting systems which we find today have developed with the development of institutions of trade, commerce and industry. In earlier days the business was simple and the transactions were few. The businessmen used to remember the transactions by memorising them. The advent of industrial revolution resulted in large-scale production and widening of markets. With the increase in business activity, the businessmen were expected to keep a track of their relationship with outsiders and to make a record of their assets and liabilities. The technological changes have also brought a change in the field of accounting. Accounting is now considered as a managerial tool for planning and control.

The accounting systems are believed to have existed as early as 4500 B.C., in the ancient civilisations of Babylonia and Assyria. The Double Entry System of today was propounded first in Genoa (Italy) in 1340. At that time, this system was used by stewards of that city for rendering accounts to state governing authorities. Though the system of DoubleEntry Book-Keeping was used earlier too but it developed in a proper form only attheendof 15th century.FraLucoPacioli,an Italian,wroteafirst treatise on Double-Entry System in 1494. Though the system of accounting was developed first in Italy but it was in England and Ireland that it grew to its full stature. During the next three centuries, the accounting system was simplified through a number of treatises written from time to time.

Definition Accounting involves the collection, recording, classification and presentation of financial data for the benefit of management and outside agencies such as shareholders, creditors, bankers and government. Eric. L. Kohlen defines accounting as "the procedure of analysing, classifying and recording transactions in accordance with a pre-conceived plan for the benefit of (a) providing a means by which an enterprise can be conducted in orderly fashion, and (b) establishing a basis for reporting the financial condition of enterprise and the results of its operations."' According to this definition, accounting is the recording of business transactions with the purpose of managing the concern in a better way and also reporting the true financial position of operations. According to the Committee on Terminology of American Institute of Certified Public Accountants, accounting is "the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events, which are in part at least, of a financial character, and interpreting the results thereof."2 The transactions which are measurable in monetary terms only form a part of accounting. The recording of transactions is done in such a way that analysis and interpretation of business activities is possible.

Classification of Accounting The word 'Accounting' can be classified into three categories. Financial Accounting, Cost Accounting and Management Accounting.

MEANING OF FINANCIAL ACCOUNTING Financial accounting may be defined as the science and art of recording and classifying business transactions and preparing summaries of the same for determining year end profit or loss and the financial position of the concern. It is that part of accounting which is employed to communicate the financial information of a business unit. The object of financial accounting is to find out the profitability and to provide information about the financial position of the concern. Two principal statements of financial accounting are Income and Expenditure Statement and Balance Sheet.

LIMITATIONS OF FINANCIAL ACCOUNTING The financial accounting is mainly concerned with the preparation of final accounts, i.e., Profit and; Account and Balance sheet. The business has become so complex that mere final accounts information v. sufficient in meeting informational needs. The management needs information for planning, controlling co-ordinating business activities. It is because of the limitations of financial accounting that cost accoun and management accounting have developed. Some of the limitations of financial accounting are discu: as follows :

Historical Nature. Financial accounting is historical in nature in the sense that it is a record o those transactions which have taken place in the business during a particular period of time. The impact of fui uncertainties has no place in financial accounting. As management needs information for future planni financial accounting can only give information about what has happened and not about what will happen. It d not suggest what should be done to increase the efficiency of the concern.

Provides Information about the Concern as a Whole In financial accounting, informatioi recorded for the whole concern. One can find information about total expenses and total receipts only. 1 information is not recorded product-wise, process-wise, department-wise or any other line of activity. I essential to record information activitywise so as to be helpful for cost determination and cost control purpos

Not helpful in Price Fixation. Financial accounting is not helpful in fixing prices of products. 1 cost of a product can be obtained only when all expenses have been incurred. It is not possible to determine 1 price in advance. The concern may be required to quote a price for the supply of goods in the near future (i submitting tenders, etc). Financial accounting cannot supply all these informations, so it is not helpful in pri determination. Price fixation requires information about variable and fixed costs, direct and indirect cos Indirect expenses are estimated on the basis of past records for price determination purposes.

Cost Control Not Possible. Cost control is not possible in financial accounting. The cost figures a known only at the end of a financial period. When the cost has already been incurred then nothing can be doi to control it. There is no technique in financial accounting which can help to ascertain whether the cost is mo; or less while the expenses are being incurred. There is no procedure to assign responsibility for higher cost if any. The costing process requires a constant review of actual costs from time to time and this thing is n< possible in financial accounting.

Appraisal of Policies Not Possible. It is not possible to evaluate various policies and programme in financial accounting.There is no technique for comparing actual performance with budgeted target; Whether the work is going on as per schedule or not, cannot be determined. The only criterion for determinin: efficiency is to see the profits at the end of financial period. The profitability is the only yardstick for evaluatinj managerial performance. Profits of an enterprise are influenced by a number of outside factors also, so it is no a reliable test for ascertaining efficiency of the management.

Only Actual Costs Recorded Financial accounting records only actual cost figures. The amoun paid for purchasing materials, property or other assets is recorded in account books. The prices of goods and assets go on varying from time to time. The present prices of assets may be absolutely different from the recorded costs.Financial accounts do not record price level changes. The recorded costs cannot provide correct information or exact values of assets.

Not Helpful in Taking Strategic Decisions. Management is to take strategic decisions like replacement of labour by machinery, introduction of a new product, discontinuation of an existing line of production, expansion of capacity, etc. The impact of these decisions and cost involved will have to be ascertained in anticipation. Various alternative suggestions are to be studied before taking a final decision. Financial accounts cannot provide necessary information for taking important decisions because information is recorded for the whole concern and it is available only when the event has taken place.

Technical Subject. Financial accounting is a technical subject. The recording of transactions and making their use requires knowledge of accounting principles and conventions. A person who is not conversant with accounting subject has little utility of financial accounts.

Quantitative Information. Financial accounting records only that information which can be quantitatively measured. Anything which cannot be quantitatively measured will not form a part of financial accounting even thought it is important for the business. The policies and plans of the government have a direct bearing on the working of the business. It is essential to determine the impact of government decisions on the entrepreneurial policies. Financial accounts will avoid qualitative factors because they cannot be quantitatively measured.

Lack of Unanimity About Accounting Principles. Accountants differ on the use of accounting principles. In spite of the efforts of International Accounting Standards Committee, there is a lack of unanimity on the use of accounting principles and procedures. The methods of valuing inventory and methods of charging depreciation are the most controversial issues on which unanimity has not been possible. The preference for the use of different accounting principles brings in an element of subjectivity and human biasedness. The use of different accounting methods reduces the usefulness and reliability of accounts.

Chances of Manipulation There are chances of using financial accounts to suit the whims of management. The over-valuation or under-valuation of inventory may change the figures of profits. More profits may be shown to get more remuneration, issue more dividend or to raise the prices of company' s shares. Less profits may be shown to save taxes or for not paying bonus to workers, etc. The possibility of manipulating financial accounts reduces their reliability.

MAKING FINANCIAL ACCOUNTS USEFUL TO MANAGEMENT After discussing limitations of financial accounting one gets the impression that financial statements are not very useful to the management. Despite various limitations financial accounting is essential for every type of concern. Some steps can be taken to make the statements more useful. The following steps will make financial statements useful to the management.

Up-to-date Accounts. Financial accounts will be useful only if they are available up-to -date. The late supply of information will reduce the utility of financial statements. The balance sheet and income statement should be ready immediately at the end of an accounting period. The management will be able to form an opinion about the performance of the business and will also take corrective measures, if necessary, for toning up the working of the organisation. If accounts are not available up-to-date then management will remain in dark regarding the performance of various segments.

Interim Reports to be Prepared. In the usual course of business the financial statements like balance sheet and income statements are prepared at the end of the financial year . Management will be able to know about the performance of the business only after preparing final accounts. If something goes wrong between the year or between the two accounting periods then management will remain ignorant about it. Interim reports should be prepared during the financial year so that short period appraisal of working of the business is possible. Whenever performance is less than the standards set then steps should be taken to rectify the things. Interim reports will enhance the utility of financial accounts to the management.

Making Comparison of Financial Statements The utility of financial accounting will be more when the principle of comparison is applied. The comparison of different financial statements will enable us to see the trend of performance. Present financial statements may be compared to the statements of previous years. This will help in assessing the present performance with that of the past performance. Historical data will provide a proper base for comparing the present performance and we will be able to judge whether the performance has improved or deteriorated. The technique of budgeting will also enable the comparison of budgeted and actual performance. If actual perfomance is better than the budgeted performance then it will go to the credit of management. If actual performance is less than the budgeted then management should take immediate steps to improve the working of the organisation. The techinique of comparison will be used as a tool for control. So the principle of comparison will enhance the utility of financial accounts to the management

ACCOUNTING AS AN INFORMATION SYSTEM Accounting provides information to vested interests in a business organisation-managers, shareholdei employees, creditors, customers, etc. Various parties are interested to know about the activities of the busines Managers may use accounting information as a managerial tool, shareholders will be interested in financi health and employees will like to share the prosperity, creditors will be interested in creditworthiness ar customers will look for cheap and quality goods. The community at large has social and economic interests i the business organisation. Accounting supplies information to all interested parties and they use it accordin to their need. Information Needs of Management. The business may be started with profit motive or with welfai motive, information needs of both are met by the accounting system. The management needs information fc planning, organising and controlling the activities of the business Different managerial functions involv decision making and realising organisational goals. The supply of information at the appropriate time will hel management in achieving business objectives.

COST ACCOUNTING Costing is a specialised branch of accounting. It has been developed because of limitations of financial accounts. In the present day it is absolutely necessary that a business concern should operate its activities with utmost efficiency and at the lowest cost. The need for determination and control of costs necessitated new set of principles of accounting and thus emerged 'cost accounting' as a specialised branch of accounting.

MEANING OF COST, COSTING AND COST ACCOUNTING The term 'cost' has a wide variety of meanings. Different people use this term in different senses for different purposes. For example, while buying a book, you generally ask, "how much does it cost" ? Here the word cost means price. But in management terminology, the term cost refers to expenditure and not the price. For our purposes, cost is not the same as price. The costing terminology of the Institute of Cost and Works Accountants, London defines cost as "the amount of expenditure (actual or notional) incurred on or attributable to a given thing." Thus, cost refers to something that must be sacrificed to obtain a particular thing.

Costing is the technique and process of ascertaining costs. It consists of the principles and rules which are used for ascertaining the costs of products and services. In the words of Harold J. Wheldon,"costing is the classifying and appropriate allocation of expenditure for the determination of the cost of products or services, and for the presentation of suitably arranged data for purposes of control and guidance of the management." In simple words, costing is a systematic procedure of determining the unit cost of product/service.

I.C.M.A, London defines cost accounting as "the process of accounting for cost from the point at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost centres and cost units. In its widest usage, it embraces the preparation of statistical data, the application of cost control methods and the ascertainment of the profitability of activities carried out or planned."

OBJECTS AND FUNCTIONS OF COST ACCOUNTING The main objects or functions of costing are as follows:

Analysis and Ascertainment of Costs: The main object of costing is to ascertain the cost of each product, process, department, service or operation. For the ascertainment of costs it involves further the study, analysis and classification of costs such as prime cost, works cost, production cost, etc. Various methods, systems and techniques of costing have been developed for the purpose of recording and determining costs.

Presentation of Costs for Cost Reduction and Cost Control : Another important function of costing is to control and reduce costs. Unless efficiently controlled, costs have a tendency to increase and cross the limits. Properly collected cost data helps in controlling and maintaining costs at the lowest. The right and appropriate cost information is made available to the right man, who needs them, at the right time and in a proper from. The best results are obtained by laying down the standard costs and then comparing the actuals with the standards so as to take necessary corrective action for the future.

Planning and Decision Making: Cost accounting has developed beyond its traditional function of cost determination and cost control. It has now developed as a tool in die hands of the management for planning and taking crucial decisions like pricing of products, introduction of a new product in the market, make or buy decisions, expansion or contraction, replacement of machinery, shut down decisions, wages compensation plan, choice among various alternatives, etc.

IMPORTANCE AND ADVANTAGES OF COST ACCOUNTING Cost Accounting as an Aid to Management : Cost accounting helps the management in carrying out its functions, i.e. planning, organising, controlling, decision-making, budgeting and pricing efficiently by providing cost information to the management. The importance of costing to the management is as follows : Cost accounting provides reliable cost data in regard to materials, labour, overhead and other expenses. It helps in price fixation. It provides informaltion on which estimates and tenders are based. It helps in channelising production on right lines. It guides future production policies and thus helps in planning. It helps in determining profitable and unprofitable activities. Cost accounting increases efficiency and reduces wastages and costs. Cost accounting helps management in periods of trade depression and competition by determi; actual cost of the product provides cost data for comparison in different periods. Costing aids in inventory control.

Advantages to Employees: An efficient costing system reduces cost and increases the profits concern thus ensuring greater security of service and increased wages to the employees. Cost accounting helps in introducing incentive wage schemes and bonus plans which bring more reward to efficient employi

Advantages to the Creditors, Investors and Bankers: Creditors, investors, bankers and others v lend money to the business are also benefited by the introduction of cost accounting in a concern. It enal the creditors, bankers and investors to judge the financial position and solvency of a concern by provid reliable cost data. Cost accounting thus helps bankers and others in evaluating the performance of a custorr The various cost reports can be analysed before lending money to a concern. A concern having a good cost system can attract more investors than a concern without an efficient system of costing.

Advantages to the Government and the Society : Cost accounting increases the efficiency c concern, reduces costs and increases its profits. Thus, it promotes the overall economic development of i country. Better and cheaper goods are made available to the public. With the reduction in wastages and incre; in profits the revenue of the Government in the form of taxes is increased. The techniques of costing are al useful in preparing national plans.

LIMITATIONS OF COST ACCOUNTING Cost Accounting, despite its many advantages to various parties, suffers from certain deficiency or limitations. Some of the important deficiencies and limitations of cost accounting are given i follows : (i) It is not an independent system of accounts (ii) . (ii) It is based largely on estimates like absorption of indirect expenses or apportionmentexpenses on estimate basis. (iii) (iii) There is a scope for subjectivity on items like depreciation, valuation of closing stock, etc. (iv) (iv) It does not take into consideration all items of expenses and incomes, e.g; items of purel financial nature such as interest, finance charges, discount and loss on issue of shares and debenture: etc. Cost accounting, no doubt, serves the internal management by directing their attention on inefficien operations and assisting in a day-to-day control of activities of the enterprise. But even costing informatioi fails to meet informational needs for managerial functions. The costing data needs to be arranged, re-analysec and processed further for playing more effective role in the managerial process. In addition to costing anc accounting data, managerial functions need the use of socio-economic and statistical data (e.g., populatior break-ups, income structures, etc.) These informations are beyond the scope of cost accounting and financial accounting which pave the way for emergence of management accounting. Management accounting provides all possible information required for managerial purposes.

MEANING AND EMERGENCE OF MANAGEMENT ACCOUNTING Management Accounting is comprised of two words 'Management' and 'Accounting'. It is the study of managerial aspect of accounting. The emphasis of management accounting is to redesign accounting in such a way that it is helpful to the management in formation of policy, control of execution and appreciation of effectiveness. It is that system of accounting which helps management in carying out its functions more effeciently.

The term 'Management Accounting' is of a recent origin. This term was first used in 1950 by a team of accountants visiting U.S.A. under the auspices of Anglo-American Council on Productivity. The terminology of cost accountancy had no reference to the word management accountancy before the report of this study group. The complexities of business environment have necessitated the use of management accounting for planning, co-ordinating and controlling functions of management.

A small undertaking with a local character is generally managed by the owner himself. The owner is in touch with day-to-day working of the enterprise and he plans and coordinates the activities himself. The use of simple accounting enables the preparation of profit and loss account and balance sheet for determining profitability and assessing financial position of the enterprise. All informational needs for managerial purposes are met by simple financial statements. Since the owner is both the decision-maker and implementor of such decisions, he does not feel the necessity of any communication system and no additional information is required for managerial purposes. The evolution of joint stock company form of organisation has resulted in large-scale production and separation of ownership and management.

The introduction of professionalism in management has brought in the division of organisation into functional areas and delegation of authority and decentralisation of decision-making. The decision-making no more remains a matter of intuition. It requires the evolution of information system for helping management in planning and assessing the results. The accounting information is required as a guide for future. The management is to be fed with precise and relevant information so as to enable it in performing managerial functions efficiently and effectively.

DEFINITIONS OF MANAGEMENT ACCOUNTING Anglo-American Council on Productivity : " Management Accounting is the presentation of accounting information in such a ways as to assist management in the creation of policy and the day-to -day operation of an undertaking." According to Smith, management accounting is nothing new but the bringing together of accounting ai management. The accounting information is given in such a way that information requirements of tl management are satisfied. Management accounting is no more a part of accounting because many more fiel< are also related to it. The Institute of Chartered Accountants of India: "Such of its techniques and procedures by which accounting mainly seeks to aid the management collectively have come to be known as management accounting." The Institute of Cost & Works Accountants of India defines Management Accounting as "a system of collection and presentation of relevent economic information relating to an enterprise for planning, controlling and decision making." The Association of Certified Corporate Accountants (U.S.A.): "The application of accounting and statistical techniques to the specified purpose of producing and interpreting information designed to assit management in the function of promoting maximum efficiency and in envisaging, formulating and coordinating their execution."

The International Fedration of Accountants has issued a very comprehensive definition of Management Accounting in 1987. In their words, Management Accounting is the process of: Identification and Measurement - the recognition and valuation of business transactions or other economic evenets that have occurred or may occur ; Accumulation - the disciplined and consistent approach to recording and classifying appropriate business transactions and other economic events ; Analysis - the determination of the reasons for and the relationship of the reported activity with other economic events and circumstances ; Preparation and Interpretation - the meaningful coordination of accounting and/or planning data to satisfy a need for information presented in a logical format and if appropriate, include the conclusion drawn from the data;

CHARACTERISTICS OR NATURE OF MANAGEMENT ACCOUNTING The task of management accounting involves furnishing of accounting data to the management for basing its decisions on it. It also helps, in improving efficiency and achieving organisational goals. The following are the main characteristics of management accounting :

Providing Accounting Information. Management accounting is based on accounting information. The collection and classification of data is the primary function of accounting department. The information so collected is used by the management for taking policy decisions. Management accounting involves the presentation of information in a way it suits managerial needs. The accounting data is used for reviewing various policy decisions. Management accounting is a service function and it provides necessary information to different levels of management.

Cause and Effect Analysis . Financial accounting is limited to the preparation of profit and loss account and finding out the ultimate result, i.e., profit or loss Management accounting goes a step further. Th 'cause and effect' relationship is discussed in management accounting. If there is a loss, the reasons for the loss i are probed. If there is a profit, the factors directly influencing the profitability are also studied. The figures of profits are compared to sales, different expenditures, current assets, interest payables, share capital, etc. So the study of cause and effect relationship is possible in management accounting.

Use of Special Techniques and Concepts. Management accounting uses special techniques and concepts to make accounting data more useful. The techniques usually used include financial planning and analysis, standard costing, budgetary control, marginal costing, project appraisal, control acconnting, etc. The type of technique to be used will be determined according to the situation and necessity.

Taking Important Decisions. Management accounting helps in taking various important decisions. It supplies necessary information to the management which may base its decisions on it. The historical data is studied to see its possible impact on future decisions. The implications of various alternative decisions are also taken into account while taking important decisions.

Achieving of Objectives. In management accounting, the accounting information is used in such a way that it helps in achieving organisational objectives. Historical data is used for formulating plans and setting up objectives. The recording of actual performance and comparing it with targeted figures will give an idea tc the management about the performance of various departments. In case there are deviations between the standards set and actual performance of various departments corrective measures can be take at once. All thil is possible with the help of budgetary control and standard costing.

Increase in Efficiency. The purpose of using accounting information is to increase efficiency of th concern. The efficiency can be achieved by setting up goals for each department or section. The performano appraisal will enable the management to pin point efficient and inefficient spots. An effort is made to tall corrective measures so that efficiency is improved. The constant review of working will make the staff cosl conscious. Every one will try to control cost on one's own part.

Supplies Information and not Decision. The management accountant supplies information to the management. The decisions are to be taken by the top management. The information is classified in the manner in which it is required by the management. Management accountant is only to guide and not to supply decisions. The data is to be used by management for taking various decisions.'How is the data to be utilised' will depend upon the calibre and efficiency of the management.

Concerned with Forecasting. The management accounting is concerned with the future. It helps the management in planning and forecasting. The historical information is used to plan future course of action. The information is supplied with the object to guide management for taking future decisions.

SCOPE OF MANAGEMENT ACCOUNTING Management accounting is a new approach to accounting . It provides techniques for the interpretation of accounting data. It also helps in developing realistic approach to future course of action. The main aim is to help management in its functions of planning, directing and controlling. Management accounting is related to a number of fields. At the Seventh International Conference of Accountants held in Amsterdem in 1957, the main emphasis was on Cost Accounting, Budgetary Control, Materials Control, Interim Reporting, Determination of the most efficient and economical accounting system, Special cost and economic studies and assisting management in interpreting financial data. The following facts of management accounting are of a great significance and form the scope of this subject.

Financial Accounting. Financial accounting deals with the historical data. The recorded facts about an organisation are useful for planning the future course of action. Though planning is always for the future but still it has to be based on past and present data. The control aspect too is based on financial data. The performance appraisal is based on recorded facts and figures. So management accounting is closely related to financial accounting.

Cost Accounting. Cost accounting provides various techniques for determining cost of manufacturing products or cost of providing service. It uses financial data for finding out cost of various jobs, products or processes. The systems of standard costing, marginal costing, differential costing and opportunity costing are all helpful to the management for planning various business activities. Cost accounting also helps in finding out economical and noneconomical fields of production. The efficiency of different departments is judged by setting up standards and finding out variances. So cost accounting is an essential part of management accounting.

Financial Management. Financial management is concerned with the planning and controlling of the financial resources of the firm. It deals with raising of funds and their effective utilisation. Its main aim is to use business funds in such a way that earnings are maximised. Finance has become so much important for every business undertaking that all managerial activities are connected with it. Financial viability of various propositions influence decisions on them. Although, financial management has emerged as a separate subject, management accounting includes and extends to the operation of financial management also.

Budgeting and Forecasting. Budgeting means expressing the plans, policies and goals of the enterprise for a definite period in future. The targets are set for different departments and responsibility is fixed for achieving these targets. The comparison of actual performance with budgeted figures will give an idea to the management about the performance of different departments. Forecasting, on the other hand, is a prediction of what will happen as a result of a given set of circumstances. Forecasting is a judgement whereas budgeting is an organisational object. Both budgeting and forecasting are useful for management accountant in planning various activities.

Inventory Control. Inventory is used to denote stock of raw meterials, goods in the process of manufacture and finished products. Inventory has a special significance in accounting for determining correct income for a given period. Inventory control is significant as it involves large sums. The management should determine different levels of stocks, i.e., minimum level, maximum level, re-ordering level for inventory control. The control of inventory will help in controlling costs of products. Management will need effective inventory control for controlling stocks. Management accountant will guide management as to whei where to purchase and how much to purchase. So the study of inventory control will be helpful managerial decisions.

Internal Audit. Internal audit system is necessary to judge the performance of every departn The actual performance of every department and individual is compared with the pre-determined standi Management is able to know deviations in performance. Internal audit helps management in fixing respc bility of different individuals.

Tax Accounting. In the present complex tax systems, tax planning is an important pai management accounting. Income statements are prepared and tax liabilities are calculated. The managen is informed about the tax burden from central government, state government and local authorities. Various returns are to be filed with different departments and tax payments are to be made in time. Tax accounting comes under the purview of management accountant's duties.

OBJECTIVES OF MANAGEMENT ACCOUNTING The primary objective of management accounting is to enable management to maximise profits or minimise losses. This is done through the presentation of statements in such a way that management is able to take correct policy decisions. The following are the important objectives of management accounting. Planning and Policy Formulation. The object of management accounting is to supply necessary data to the management for formulating plans. Planning is essentially related to taking decisions for future. It also includes forecasting, setting goals and deciding alternative courses of action. Management accountant prepares statements of past results and gives estimations for the future. He also gives his assessment of various facets and gives his preference for a particular alternative. The figures supplied and opinion given by the management accountant help management in planning and policy formation. To Controll Performance. Management accounting devices like standard costing and budgetary control are helpful in controlling performance. The work is divided into different units and separate goals are set up for each unit. The performance of every unit is made the responsibility of a particular person. The required authority for getting the work done is also delegated to the concerned persons. The actual results are compared with predetermined objectives. The management is able to find out the deviations and take necessary corrective measures. Different departmental heads are associated with preparing budgets and setting up goals. The management accountant acts as a co-ordinating link between different departments and he also monitors their performance to the top management. The management is able to control performance of each and every individual with the help of management accounting devices. To Help in Organising. Organisation is related to the establishment of relationship among different individuals in the concern. It also includes the delegation of authority and fixing of responsibility. Management accounting is connected with the establishment of cost centres, preparation of budgets, preparation of cost control accounts and fixing of responsibility for different functions. All these aspects are helpful in setting up an effective and efficient organisational framework. To Interprete Financial Information. The main object of management accounting is to present financial information to the management in such a way that it is easily understood. Financial information is of a technical nature and managerial personnel may not be able to understand the significance and utility of various financial statements. Management

accountant explains these statements to the management in a simple language. If necessary, he uses statistical devices like charts, diagrams, index numbers, etc. so that the information is easily followed. Motivating Employees. Management accounting helps the management in selecting best alternatives of doing the things. Targets are laid down for the employees. They feel motivated in achieving their targets and further incentives may be given for improving their performance. To Help in Making Decisions. The management has to take certain important decisions. A decision may have to be taken about the expansion or diversification of production. There may be a question of replacement of labour with machine or introduction of latest technological devices. Management accountant prepares a report on the feasibility of various alternatives and makes an assessment of their financial implications. The information provided by the accountant helps management in selecting a suitable aternalti ve and taking correct decisions. Reporting to Management. One of the primary objectives of management accounting is to keep the management fully informed about the latest position of the concern. This helps management in taking proper and timely decisions. The management is kept informed through regular financial and other reports. The performance of various departments is also regularly communicated to the top management. To Help Tax Administration. The complexities of tax system are increasing every day. Management accounting helps in assessing various tax labilities and depositing correct amount of taxes with; the concerned authorities. Various tax returns are to be filed under different tax laws. Tax administration isj carried on with the advice and guidance of the management accountant.

FUNCTIONS OF MANAGEMENT ACCOUNTING Management accounting is a part of accounting. It has developed out of the need for making more and more use of accounting for taking managerial decisions. Management accounting is assigned the functions of classifying presenting and interpreting data in such a way that it helps management in controlling and running! the enterprise in an efficient and economical manner. Some of the functions of management accounting are] given as follows : (i) Planning and Forecasting. Management fixes various targets to be achieved by the business in near future. Planning and forecasting are essential for achieving business objectives. One of the important functions! of the management accounting is to help management in planning for short-term and long term periods and also! in making forecasts for the future. Management accountants use various techniques such as budgeting, standard! costing, marginal costing, fund flow statements, probability and trend ratios, etc. for fixing targets. These! techniques are useful in planning various activities. So management accounting tools are useful in planning and! forecasting. (ii) Modification of Data. Management accounting helps in modifying accounting data. The informa-l tion is modified in such a way that it becomes useful for the management. If sales data is required, it can bej classified according to product, area, season-wise, type of customers and time taken for getting payments, etc.! Similarly, if production figures are needed, these can be classified according to product, quality, time taken byl iii) Financial Analysis and Interpretation. Management accountant undertakes the job of presenting financial data in a simplified way. Financial data is generally collected and presented in a technical way. Top managerial executives may lack technical knowledge. Management accountant analyses and interprets financial data in a simple way and presents it in a non-technical language. He gives facts and figures about various policies and evaluates them in monetary terms. He gives his opinion about various alternative courses of action so that it becomes easy for the management to take a decision. (iv) Facilitates Managerial Control. Management accounting is very useful in controlling performance. All accounting efforts are directed towards control of the enterprise. The standards of various departments and individuals are set-up. The actual performance is recorded and deviations are calculated. It enables the management to assess the performance of everyone in the organisation. Performance evaluation is

possible through standard costing and budgetary control which are an integral part of management accounting. (v) Communication. Management accounting establishes communication within the organisation and with the outside world. The management accountant prepares reports for the benefit of different levels of management and employees. The activities of the concern, are communicated to outsiders such as bankers, investors, creditors, government agencies, etc. The filing of various tax returns is also entrusted to the accountant. (vi) Use of Qualitative Information. The field of management accounting is not restricted to the use of monetary data only. It collects and uses qualitative information also. While preparing a production budget, management accountant may not only use past production figures, but he may rely on the assessment of persons dealing with production, productivity reports, consumer surveys and many other business documents. The use of qualitative information is as helpful as monetary information. Management can assess various aspects of a plan before finalising it. (vii) Co-ordinating. The co-ordination among different departments is essential for smooth running of the concern. Management accountant acts as a co-ordinator among different financial departments through budgeting and financial reports. The targets and performances of different departments are communicated to them from time to time. It helps to increase the efficiency of various sections thereby increasing profitability of the concern. (viii) Helpful in taking Strategic Decisions. Management accounting helps in taking strategic decisions. It supplies analytical information regarding various alternatives and the choice of management is made easy. These decisions may be regarding seasonal or temporary stoppage of production, replacement decisions, expansion or diversification of works and a correct decision is taken. (ix) Supplying Information to Various Levels of Management. Every management level needs accounting information for decisions making and policy execution. Top management takes broader decisions and leaves day-to-day decisions for the lower levels of management. Management accountant feeds information to different levels of management so that further decisions are taken. The supply of adequate information at the proper time will increase efficiency of the management.

MANAGEMENT ACCOUNTING PROCESS The management accounting process begins with identification, measurement and accumulation of relevent data from financial and cost accounting records, and also from other externat sources. The data is then regrouped, classified and analysed. The interpretations are made and information is communicated to internal and external users of such information for making decisions. Decision making is linked to planning and control. Variations from plans are identified and feedback is built up for corrective measures. Data Support Data SupportData Support Management Accounting Is the process of Data Identification Measurement Accumulation Analysis Preparation and Interpretation Communication of Information to Management and others Planning and Decision Making

Data Generation Implementation Control

RELATIONSHIP OF MANAGEMENT ACCOUNTING WITH FINANCIAL ACCOUNTING Financial accounting and management accounting are the two branches of the accounting informatii system of business enterprises. Financial accounting is concerned with the recording of day-to-dj transactions of the business. These transactions are classified according to their nature. These transactioi enable the concern to find out profit and loss for a particular period and financial position of the concern is a judged on a particular date through profit and loss account and balance sheet respectively. On the other ham management accounting uses financial accounts and taps other sources of information too. The accounts ai used in such a way that they are helpful to the management in planning and forecasting various policies. Thu: financial accounting has a significant influence on management accounting. Further the principles of financi; accounting are equally useful in management accounting also. It should also be noted that managemen accounting is only an off-shoot of financial accounting. Both financial and management accounting an complementary and are necessary in running the concern efficiently.

distinction between financial accounting and management accounting. The main points of distinction are discussed as below : Object. The object of financial accounting is to record various transactions with the purpose of maintaining accounts and to know the financial position and to find out profit loss at the end of the financial year. These records are useful to shareholders, creditors, bankers, debenture holders, etc. On the other hand, management accounting is essential to help management in formulating policies and plans. Nature. Financial accounting is mainly concerned with the historical data. It records only those transactions which have already taken place. Management accounting deals with projection of data for the future. It uses historical data only for taking decisions for the future. In financial accounting actual figures are used whereas in management accounting projected or estimated figures are used. Subject-matter. Financial accounting is concerned with assessing the results of the whole business while management accounting deals separately with different units, departments and cost centres. In financial accounting overall performance is judged, while in management accounting the results of different departments are evaluated separately to find out their performance differently. Financial accounts are concerned with details whereas management accounting is concerned in analysing data from different angles. Compulsion. The preparation of financial accounts is compulsory in certain undertakings while these are a necessity in others. Management accounting is not compulsory. It is only a service function and is helpful to the management in administration of the business. The management is free to use or not to use management accounting. Under certain laws a particular procedure is to be followed for preparing financial accounts whereas there are no such procedures in management accounting. It is the suitability of the management which is important while using management accounting. Precision. In management accounting no emphasis is given to actual figures. The approximate figures are considered more useful than the exact figures. In financial accounting only actual figures are recorded and there is no room for using approximate figures. The transactions are recorded only when they have taken place so exact figures are used. Reporting. Financial accounts are prepared to find out profitability and financial position of the concern. These reports are useful for outsiders like bankers, investors, shareholders, Government agencies, etc. These reports are prepared not only for the benefit of the concern but also for

outsiders. Management accounting reports are meant for internal use only. These are prepared for the benefit of different levels of management. Financial reports such as profit and loss account and balance sheet are prepared for a specific period and on a particular date. On the other hand, there is no such binding for preparing management accounting reports. The main idea for preparing these reports is to enable the management to have a view about the position of the concern and no consideration is given to the period. Management accounting reports are rather future projections of figures. Description. Only those things are recorded in financial accounting which can be measured in monetary terms. Anything which cannot be recorded in figures is outside the scope of financial accounting. Management Accounting uses both monetary and non-monetary events. The competition in the market, impact of political changes, a situation of trade cycles and such other factors are also considered in management accounting, though these cannot be measured in monetary terms. Quickness. Reporting of management accounting is very quick. Management is fed with reports at regular intervals. Various figures are required to take managerial decisions at different levels of management. On the other hand, reporting of financial accounting is slow and time consuming. Profit and loss account and balance sheet are prepared at the end of the financial year. Management is able to know the profitability and financial position only after the preparation of final accounts. Accounting Principles. Financial accounts are governed by the generally accepted principles and conventions. No set principles are followed in management accounting. Management accounting is used for taking policy decisions, so, form and method of presenting figures differs from concern to concern. The requirement and expediency of the situation determines the mode of information to be presented Period. Financial accounts are prepared for a particular period. Profit and Loss Account is generally prepared for one year. All the items relating to that year are taken to P/L Account. Balance Sheet is prepared on a particular date. It reveals the financial position of the concern on that date. Management accountanl supplies information from time to time during the whole year. There are no specific periods for whici management accounts are prepared. Publication. Financial accounts like profit and loss account and balance sheet are published for the benefit of the public. Under companies law every registered company is supposed to supply a copy of Profit and Loss Account and Balance Sheet to the Registrar of Companies at the end of

the financial year. Managemert accounting statements are prepared for the benefit of the management only and these are not published. Audit. Financial accounts can be got audited. Under Company Law, auditing of financial account! is compulsory. Management accounts cannot be audited. They are not based on actual figures and projected daU are also used in management accounting. So, it is not possible to get management accounts audited.

RELATIONSHIP BETWEEN COST AND MANAGEMENT ACCOUNTINg Object. The object of cost accounting is to record the cost of producing a product or providing a service. The cost is recorded product wise or unit wise. Besides recording, it deals with cost control, matching of costs with revenue and decision-making. The purpose of management accounting is to provide information to the management for planning and co-ordinating the activities of the business. Scope. The scope of management accounting is very wide. It includes financial accounting, cost accounting, budgeting, tax planning, reporting to management and interpretation of financial data. On the otha hand, cost accounting deals primarily with cost ascertainment. Nature. Management accounting is generally concerned with the projection of figures for future. The policies and plans are prepared for providing future guidelines. Cost accounting uses both past and present figures. Data used. In cost accounting only those transactions are taken which can be expressed in figures. Only quantitative aspect is recorded in cost accounting. Management accounting uses both quantitative and qualitative information. Development. The development of cost accounting is related to industrial revolution. Financial accounting could not satisfy information needs of management. Cost accounting was thus evolved as a supplementary accountig method. Cost accounting was able to provide information not only about cost structure but also for planning and decision-making. Management accounting has developed only in the last thirty years. Management accounting and cost accounting are both complementary subjects. Principle followed. Certain principles and procedures are followed for recording costs of different products. The same rules are applicable at different times too. No specific rules and procedures are followed in reporting management accounting. The information is prepared and presented as is required by the management.

MANAGEMENT ACCOUNTING CONVENTIONS Many principles are tried and tested and then some suitable conventions are developed which become helpful in day-to-day working of the business. The conventions are the outcome of various trials and errors practised in the business. The subject of management accounting is in the process of development. Many tools and techniques are applied in recording, analysing and interpreting financial statements. Some conventions have been established in management accounting and they are helpful in maintaining the records smoothly and making the statements more useful to the management. Some of these conventions are discussed as follows : The procedures and methods to be followed for keeping and analysing financial statements should have consistency. It enables to keep the figures comparable. If the methods are frequently changed then utility of the statements will be reduced. The principles should be such that all possible losses should be taken into account. On the other hand, profits should be considered only when they have actually accrued. Only normal costs should be considered while finding out costs of the products. The cost of the products should reflect costs under normal situation. Abnormal cost may arise due to obsolescence or idle capacity due to less demand. The convention of the objectivity should be followed while recording financial statements. There should be no room for human bias or prejudice. There should not be a choice left to the accountant while making records. The measuring rod of efficiency of a concern should be a return on capital employed. It should be consistently used so that a comparison is possible in the figures of different years. A comparison in performance is possible not only among equal size concerns but also among different size concerns. J Standard forms should be used for recording cost data. It will enable a comparison^ of ^bsts among different units. The costs should be divided into controllable and uncontrollable costs. Controllable costs are those which can be kept under control by the efforts of the management. Uncontrollable costs are affected by the outside reasons such as increase in price of materials, upward revision of labour rates by the government, etc. An increase in controllable costs will enable the management to fix responsibility and take corrective measures.

The aim of management should be to utilise resources of the concern in the best possile way. The use of various processes and methods should enable the achievement of that object. The principle of revaluation accounting should be used to keep the data up to-date.Due to inflationary situation, various assets are not shown at real values. Revaluation accounting is not yet widely used because it effects objectivity of accounts.

TOOLS AND TECHNIQUES OF MANAGEMENT ACCOUNTING A number of tools and techniques are used to supply the information required by the management. No one technique can satisfy all managerial needs. The tools and techniques used in management accounting are discussed as follows: Financial Policy and Accounting. Every concern has to take a decision about the sources of raising funds. The funds can be raised either through the issue of share capital or through the raising of loans. Again adecision is to be taken about the type of capital, i. e., equity share capital or preference share capital. Preference share capital can be sub-divided into a number of types. The second decision concerns the raising of loans. Whether the loans should be long term or short-term is again a matter of policy. The proportion between share capital and loans should also be decided. All these decisions are very important and management accounting provides techniques for financial planning. Tax planning IT is another aspect where management is helped by the management accountant. He tries to use various rules and regulations for the benefit of the organisation. Analysis of Financial Statements. The analysis of financial statements is meant to classify present the data in such a way that it becomes useful for the management. The meaning and significance o data is explained in a non-technical language. The techniques of financial analysis include compan financial statements, ratios, funds flow statements, trend analysis, etc. Historical Cost Accounting. The system of recording actual cost data on or after the date wh has been incurred is known as historical cost accounting. The actual cost is compared to the standard cost it gives an idea about the performance of the concern. Though costing is important but by itself its utili limited. Budgetary Control. It is a system which uses budgets as a tool for planning and control. The bud of all functional departments are prepared in advance. The budgets are based on historical data and fu possibilities. The actual performance is recorded and compared with the predetermined targets. Managen is able to assess the performance of each and every person in the organisation. The timing of budgets and fine out deviations is an important tool for planning and controlling. Standard Costing. Standard costing is an important technique for cost control purposes. In stanc costing system, costs are determined in advance. The determination of standard cost is based on a system

analysis of prevalent conditions. The actual costs are recorded and compared with standard costs. The variam if any, are analysed and their reasons are ascertained. Standard costing helps to enhance the efficiency of concern and also 'management by exception'. Marginal Costing. This is a method of costing which is concerned with changes in costs result from changes in the volume of production. Under this system, cost of product is divided into marginal (varial and fixed cost. The latter part of cost (fixed) is taken as fixed and is recorded over a level of production and ev additional production unit involves only variable cost. Marginal costing is helpful for measurement profitability of different lines of production, different departments and divisions of an enterprise. The decisii about short term utilisation of capacity are also assessed with the help of marginal costing. Decision Accounting. An important work of management is to take decisions. Decision taki involves a choice from various alternatives. There may be decisions about capital expenditure, whether to m or buy, what price to be charged, expansion or diversification, etc. Management accounting calculates financ implications of each alternative course of action and enables management to select the best course of acti< Revaluation Accounting. This is also known a Replacement Accounting. The preservation of capi in the business is the main object of management. The profits are calculated in such a way that capital preserved in real terms. During periods of rising prices, the value of capital is greatly affected. According Batty. "Revaluation accounting is used to denote the methods employed for overcoming the problei connected with fixed asset replacement in a period of rising prices." Control Accounting. Control accounting is not a separate accounting system. Different syster have their control devices and these are used in control accounting. Standard costing and budgetary control a be exercised through variance analysis reports. In control accounting we can use internal check, internal aud statutory audit and organisation and methods for control purposes. Management Information Systems. With the development of electronic devices for recording ar classifying data, reporting to management has considerably improved. The data planning co-ordination ar control is supplied to the management. Feed back of information and responsive actions can be used as contn techniques.

NEED AND IMPORTANCE OF MANAGEMENT ACCOUNTING In the present complex industrial world, management accounting has become an integral part o management. Management Accountant guides and advises management at every step. The increase in scale o operations has increased the significance of management accounting also. Improvement in analytical an< problem solving techniques of management accounting and information needs of various levels of managemen are met regularly Management accounting not only increases efficiency of the management, it also increases efficiency of the employees. The following are the advantages of management accounting : Increases Efficiency. Management accounting increases efficiency of business operations. The targets of different departments are fixed in advance and the achievements of these goals is a tool for measuring their efficiency. Proper Planning. Management is able to plan various operations with the help of accounting information. The technique of budgeting is helpful in forecasting various activities. Budgets are prepared department wise firstly and then a master budget is prepared for the whole organisation. The work load of each and every individual is fixed in advance. The activities of the concern are planned in a systematic manner. Measurements of Performance. The systems of budgetary control and standard costing enable the measurement of preformance. In standard costing, standards are determined and then actual cost is compared with standard cost. It enables the management to find out deviations between standard cost and actual cost. The performance will be good if actual cost does not exceed the standard cost. Budgetary control system too helps in measuring efficiency of all employees. Maximising Profitability . The thrust of various management techniques is to control cost of production and increase efficiency of each and every individual in the organisation. The steps of controlling costs are able to reduce cost of production. The profits of the enterprise are maximised with the help of management accounting system. Every unit of the organisation tries to contribute its maximum which enables the best use of all factors of production. The return on investments also goes up. Improves Service to Customers. The cost control devices employed in management accounting enable the reduction of prices. All employees in the concern are made cost conscious. The quality of products becomes good because quality standards are pre-determined. The customers are

supplied good quality goods at reasonable prices. The increase in production of goods also enhances supply of goods to consumers. Effective Management Control. The tools and techniques of management accounting are helpful to the management in planning, co-ordinating and controlling activities of the concern. The setting of standard and assessing actual performancffTegularly enables the management to have "management by exception." Everybody assesses his own work and immediate actions are taken in case of deviations in performance.

LIMITATIONS OF MANAGEMENT ACCOUNTING Though management accounting is helpful in providing guidelines for planning, directing and controlling functions, still its effectiveness is limited by a number of reasons. Limitations of management accounting are explained as follows : Based on Accounting Information. Management accounting is based on data supplied by financial and cost accounting. Historical data is used to make future decisions. The correctness and effectiveness of managerial decisions will depend upon the quality of data on which these decisions are based. If financial data is not reliable then management accounting will not provide correct analysis. Because management accounting has to depend upon the information collected by other sources, its effectiveness is limited to the reliability of those sources. Lack of Knowledge. The use of management accounting requires the knowledge of a number of related subjects. Management should be conversant with accounting principles, statistics, economics, principles of management, etc., and only then management accounting can be effectively utilised. Deficiency in knowledge of any of these subjects limits the use of management accounting. So the application of management accounting will be useful if persons connected with decision-making process have proper understanding not only of management accounting but also of related subjects. Intuitive Decisions. Though management accounting provides scientific analysis of various situations and enables decision taking based on facts and figures, there is a tendency to make decisions intuitively. Management may avoid a lengthy course of deciding things and may take an easy course of arriving at decisions using intuition. Intuitive decisions limit the usefulness of management accounting. Not an Alternative to Administration. Management accounting does not provide an alternative to administration. The tools and techniques of management accounting provide only information and not decisions. Decisions are to be taken by the management and their implementation is also done by manage So management accounting has supplimentary service function and has no final say neither in taking deci nor in their implementation. Top Heavy Structure. The installation of a management accounting system needs an elab organisational system. A large number of rules and regulations are also required to make this system worl and effective. Introduction of management accounting system is a costly affair and can

be used by big com only. Smaller units cannot afford to use this system because of heavy cost. Evolutionary Stage. Management accounting is only ina developmental stage, it has not yet rea a final stage. The techniques and tools used by this system give varying and differing results. The concluf taken from analysis and interpretation are not the same. It will take some time before management accoui takes a final shape. Personal Bias. The interpretation of financial information depends upon the capability of interp; as one has to make a personal judgement. There is every likelihood of personal bias in analysis interpretation. Personal prejudices and bias affect the objectivity of decisions. Psychological Resistance. The installation of management accounting involves basic change organisational set up. New rules and regulations are also required to be framed which affect a numbe personnel and hence there is a possibility of resistance from some quarters or the other.

installation of management accounting system It involves the following steps : Organisational Manual: First of all organisational manual should be prepared and adopted. Thi will clearly explain the duties and responsibilities of various managerial levels in the organisational hierarch) It will not only fix responsibility but will also avoid duplication of duties. It will also help the communicatioi process. Preparing Forms and Returns. The second step in installing management accounting system wil be the designing and preparing of various forms and returns required for collection and presentation oi information for management needs. Requisite Stalling. Therequisite staffshould be recruited for making this system effective. The stafl should be given proper training so that the objectives and implementing techniques are clear to everyone associated with this system. Classifying Accounts and Integrating the System. The accounts are classified to facilitate collection and analysis of data. Thefinancial and cost accounting systems should be integrated. Management will require both financial and costing information and both the systems should be combined to provide necessary information. Introducing Standard Costing Techniques. The techniques ofstandard costing are introduced for setting up standards and recording the performance so that reasons for variations are ascertained and corrective measures are taken in time. Setting up Budgetary Control System. Budgetary control system should be introduced to plan the activities of various departments. The integration of various budgets into a master budget will help in determining the organisational goals. An integrated system of budgetary control and system of cost and profit centres will be very useful. Setting up Operational Research Techniques. The business is operating under changing economic, political and social environment. Everyday a new challenge is faced. The operational research techniques will be essential to cope with the need of the hour.

MANAGEMENT ACCOUNTANT Any person responsible for the supply of accounting information to management is known as management accountant. He feeds informational needs of different managerial levels. He is known by different names in different organisations, i.e. , Controller, Comptroller, Chief Accountant, Financial Adviser, Financial Controller, etc. It is essential to determine the status of management accountant in the organisation. It is also necessary to determine his scope of work and responsibility. If management accountant provides the facts as accurately as are needed and are presented in a manner which allows proper analysis and interpretation then he cannot be held responsible for any wrong judgment by the management. On the other hand, if the information is biased, inaccurate or it is not presented properly then responsibility will lie on the management accountant.

Functions of Management Accountant The functions of management accountant depend upon his status in the organisation, needs of the enterprise and personal capabilities of the persons. But still some functions are commonly performed by management accountants. The Financial Executives Institute, America has specified the functions of the controller as follows : Planning for Control. Management accountant establishes, co-ordinates and maintains an integrated plan for the control of operations. Such a plan would provide cost standards, expense budgets, sales forecasts, capital investment programmes, profit planning and the system to effectuate the plans. Reporting. Management accountant measures performance against given plans and standards. The results of operations are interpreted to all levels of management. This function will include installation of accounting and costing systems and recording of actual performance so as to find out deviations, if any. Evaluating. He should evaluate various policies and programmes. The effectiveness of planning and procedures to attain the objectives of the organisation will depend upon the calibre of the management accountant. Administration of Tax. Management accountant is expected to report to Government agencies as required under different laws and to supervise all matters relating to taxes. Appraisal of External Effects. He is to assess the effect of various economic and fiscal policies of the Government and also to evaluate the impact of other external factors on the attainment of organisational! objects. Protection of Assets. The protection of business assets is another function assigned to the management accountant. This function is performed through the maintenance of internal controls, auditing and assuring proper insurance coverage of asesets.

Duties of Management Accountant The primary duty of management accountant is to help management in taking correct policy decisions and improving efficiency of entrepreneurial operations. This duty may require him not only to help management with the necessary information from the business sources but he may have to collect information from outside sources too. The information is made useful by arranging and re-adjusting in such a way that the management is able to understand its significance and utility for managerial purposes. Generally, following duties are performed by the management accountant: Collection of Information. The information used in management accounting is collected from a number of sources both inside and outside the business. Inside the business, the information may have to be collected from financial accountant, production department, purchase department, sales department, costing department, etc. The outside sources may be competitors, financial statements, market, surveys, govemmenl policy decisions, share and stock exchanges, trade and industry journals, etc. The management accountant wit first decide about the type of information required and then the relevant source for it. Evaluation of Information. The next duty of the management accountant after the collection fl information is to evaluate it.The whole information may not be needed at present. The management has ver less time at its disposal so only relevant information should be supplied to it. The management accountai will distinguish between relevant and irrelevant information. He will also assess the utility of the informatiot He will leave irrelevant and unnecessary information and management will be supplied only necessar information in a systematic manner. Interpretation of Information. The interpretation of information is another task assigned I management accountant. If the information is supplied without interpretation then its utility will be much les Management accountant gives facts and figures about various policies and evaluates them in monetary term He is also expected to give his opinion about various alternative courses of action so that it becomes easy f the management to take decisions. Reporting of Information. Another duty of management accountant is to supply information to tl management. He meets informational needs of the management. The information is supplied whenever neede This information helps management to understand the implications of various decisions and the decisions w be more realistic when they are based on facts and figures.

Management Accountant for the Millennium With exponential growth in Information Technology (IT) and the ongoing process of liberalisation prospective Management Accountant for the millennium has to be equipped with latest IT tools and he 1 to be a person with global prospective who could respond immediately for generating various alternatives decision making. To be successful in the new millennium, a management accountant should have the expos' in various fields such as : Mathematics. Quantitative Techniques. Technology including Information Technology. Management Information Systems. International Markets. International Laws and Customs of Trade. Mergers and Acquisitions. Human Resource Management. International Financial Management - Global Depository Receipts (GDRs), Euro Issues etc.