Managerial Accounting


In any commercial or industrial organization, whether big or small, accounting is always of great consequence towards effective administration. Managerial Accounting helps to arrange the financial obligations in managing the business and the processes that may be involved in its success. Accurate measurements, analysis, communication and interpretation of its financial status are the focus of Managerial Accounting. Therefore a managerial accountant’s task encompass identification, accumulation, calculation, breakdown, research, comprehension and conveyance of data. The prepared reports may also prove as a useful deciding tool for non-managerial groups such as shareholders, creditors, regulatory agencies and tax authorities.

Back in the late 1980s, the field of Managerial accounting has gone through a major transformation in response to the changes in the business society. Accountants, as well as Accounting educators were by then criticized on the grounds that the management accounting processes and the curriculum taught to students have become obsolete and improved so little over the past sixty years. The trepidation that management accounting would be considered unnecessary in any business establishments for the coming years, Professional accounting institutions dedicated and committed considerable resources and time in developing more innovative skills and learning for management accountants.

Managerial Accounting takes part in various areas of business organization management. In planning, the Management Accountant assists by providing information concerning pricing, capital expenditure projects, product costs or competition. As for budgeting, they also provides data such as preceding costs and revenues.

In the area of controlling, the management accountant presents performance reports comparing the actual and planned performance and emphasizes activities without conformity to the plan.

As for organizing, it is the duty of the managerial accountant to fortify the objectives of the organizational framework.

The management accountant also participate in motivating. Both managers and subordinates are motivated with budget and performance reports that the accountant prepares which encompass individual performance ratings in relation to targets set for the organization.

In decision making, the managerial accountant collects and analyzes data and presents them for the managers to decide.

There are no strict rules which oversee the way management accounting is executed as long as the information a management accountant presents to the managers is found useful and appropriate. The reports have no specific format. However, the management accountant must ensure that their actions, maneuvers and reports are all relevant, complete and sufficiently accurate for their purposes. Each of the management accountant’s reports must be clear so that the manager would be confident and certain in using it. The management accountant must also ensure that he uses communication channels to convey data and information he has gathered and analyzed to appropriate recipients and at a cost that is both economical and beneficial.

In effect, if the managerial accountant who practices what is expected, he/she will accordingly perform dynamic approach to accounting procedures necessary for the business of the organization. Financial assets and business outcomes will be managed and determined respectively. Business programs and activities will be highly developed as well as strategies for future success and even expansion. Resources will be optimized and maximized to its full potential.

Source by W Tsang

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