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Management Accounting

Management Accounting

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Published by ClassOf1.com
Management Accounting or Managerial accounting assists mangers in the day to day execution of normal activities as well as for the more important task of decision making or formulating strategies.
Management Accounting or Managerial accounting assists mangers in the day to day execution of normal activities as well as for the more important task of decision making or formulating strategies.

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Published by: ClassOf1.com on Oct 09, 2013
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10/09/2013

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ManagementAccounting
 
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 *
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.
Subject: Management Accounting
 
Management Accounting
Management Accounting or Managerial accounting assists mangers in the day to day execution of normal activities as well as for the more important task of decision making or formulatingstrategies.In essence, this branch of accounting identifies, measures, analyzes, interprets data andcommunicates information for the sole purpose of monitoring and control of activities to achievethe cost optimization goal.
How is Management Accounting different from Financial Accounting?Purpose:
Management accounting is basically for the people within an organization for thepurpose of planning and control while financial accounting is mainly for those outside it, such asshareholders and creditors
Legality:
Financial accounting is a statutory requirement while management accounting is not.
Scope:
Financial accounting covers the entire organization while management accounting may beconcerned with particular products or cost centers.
Statements and Reports:
Financial Accounting reports the results of a financial year in the formof Balance Sheet, Cash Flow Statement and Income Statement. The reports generated by Management Accounting are Sales Forecasting reports, Budget analysis and comparative analysis,Feasibility studies, Merger and consolidation reports
Principles Followed:
Financial accountants always follow Generally Accepted AccountingPrinciples set by professional bodies in each country or International Financial ReportingStandards (IFRS), Management or managerial accountants make use of procedures and processesare more individualistic in nature and differ from company to company.
 
 *
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.
Subject: Management Accounting
 
Nature:
Management Accounting provides top management with reports that are future-oriented, while Financial Accounting provides reports based on historical facts and data.
Periodicity:
Management Reports can be weekly, bi-weekly or monthly .There is no time span forproducing Managerial accounting statements but financial accounting statements are generally required to be produced for the period of 12 previous months.
Statutory Requirement:
Firms use management accounting at their own discretion .There is nostatutory requirement for an organization to use management accounting, but publicly traded firms(limited companies or whose shares are bought and sold on an open market) must, by mandate,prepare financial account statements.
 Auditing Requirement:
In management accounting systems there is no mandatory requirementfor an independent external audit, but financial accounting annual statements must be audited by 
an independent Chartered Accountant’s
firm.
Concerns:
In management accounting systems, management may be concerned about how reports will affect employee behavior whereas financial Accounting concerns are about theadequacy and completeness of disclosure in financial statements.
Format:
There is no particular format for preparing Management reports. However the financialstatements prepared in accordance with the provisions of a particular country have to follow therules of that particular country.Thus Management Accounting is concerned with strategies and plans to achieve the corporate goalsand objectives.

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