Sub: Accounting Topic: Management Accounting
The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
Functions of Management Accounting
Management accounting is assigned the functions of classifying presenting and interpreting data insuch a way that it helps management in controlling and running the enterprise in an efficient andeconomical manner. Some of the functions of management accounting are as mentioned below:1)
Planning and forecasting:
One of the important functions of the management accounting is tohelp the management in planning for short term and long term periods and also in making forecastsfor the future. Management accountants use various techniques such as budgeting, standard costing,marginal costing, funds flow statements, probability and trend ratios etc. for fixing the targets. Thesetechniques are useful in planning various activities. As such, the management accounting tools areuseful in planning and forecasting;2)
Modification of data:
Management accounting helps in modifying the accounting data. Theinformation is modified in such a way that it becomes useful for the management and if sales data isrequired, it can be classified according to the product, area, season wise type of customers and timetaken for getting the payments etc.3)
Financial analysis and interpretation:
Management accountant undertakes the job of presentingthe financial data in a simplified way. Financial data is generally collected and presented in atechnical way. Top managerial executives may lack technical knowledge. Management accountantanalyses and interprets financial data in a simple way and presents it in a non technical language. Hegives facts and figures about various policies and devaluates them in monetary terms. He gives hisopinion about the various alternative courses of action so that it becomes easy for the managementto take a decision;4)
Facilitates managerial control:
Management accounting is very useful in controlling performance.