The term “Management Accounting” is of recent origin. It was first coined by the British Team of Accountants that visited the U.S.A. under the sponsorship of Anglo-American Productivity Council in 195 with a view of highlighting utility of Accounting as an “effective management tool”. It is used to describe the modern concept of accounts as a tool of management in contrast to the conventional periodical accounts prepared mainly for information of proprietors. The object is to expand the financial and statistical information so as to throw light on all phases of the activities of the organisation.
All techniques which aim at appropriate control, such as financial control, budgeted control, efficiency in operations through standard costing, cost-volume-profit theory etc, are combined and brought within the purview of Management Accounting.
Management Accounting evolves a scheme of accounting which lays emphasis on the planning of future (logical forecasting), simultaneously finding the deviations between the actual and standards. Another significant feature of Management Accounting is reporting to top-management. Finally, accounting information should be presented in such a way as to assist the management in the formulation of policy and in the day-to-day conduct of business. For example, the published accounts of business concerns do not furnish management with information in a form that suggest the line on which management policies and actions should proceed. It requires further analysis classification and interpretation before the management can draw lessons from them for their guidance and action.
12 Comments