Hello everyone,

In understanding the role of managerial accounting in a company, it is imperative to define

management accounting, which is the process of providing financial information that guides
management decisions.

Management accounting plays a significant role in the retail industry by helping management
in making important decisions in various segments as highlighted below.

· Product Review: this refers to the accounting report detailing the financial statistics of a
product to help management determine how well a product is doing be it profit or loss, in
other to make crucial decisions for the growth of the business.

· New Product Launch: this refers to the accounting report detailing the step-by-step
financial breakdown of production, which in turn gives the management the exact picture of
what the retail price should be in other to maintain a balanced market with profit in view.

· Promotional Activities: this refers to the accounting report detailing the growth pattern of
each product, thereby giving management a clear picture of both the fast movers and slow
movers in planning for any promotional activity.

· Staffing: this refers to the accounting report detailing the current expenditure on staffing,
as against the return on investment on the number of staff present in the company (Boyd,
2021).

Below are the accepted principles of management accounting.

· Designing and Compiling

· Management by Exception

· Control at Source Accounting

· Accounting for Inflation

· Use of Return on Investment

· Utility

· Integration

· Absorption of Overhead Costs

· Utilization of Resources

· Controllable and Uncontrollable Costs

· Forward-Looking Approach

· Appropriate Means
· Personal Contacts

The principles of management accounting help management streamline past, present, and
future information both financial and non-financial as it relates to the business.

A very crucial management accounting activity that would be useful in organizations is

Internal Control Monitoring, which refers to the rules and regulations set by the management
accountant on operational activities to present overages and losses, which could emanate
from theft, error, or technological breakdowns (Codjia, 2017).

References:

Accountinglearning.com. (n.d.). Principles of Management Accounting. Retrieved from

https://accountlearning.com/principles-management-accounting/

Boyd, K. (2021, January 30). What is management accounting and why is it important for
business? Retrieved from https://www.myob.com/au/blog/management-accounting-
important-business/

Cimaglobal.com. (n.d.). Global Management Accounting Principles. Retrieved from

https://www.cimaglobal.com/Documents/Employer%20docs/web%20pages%202016/global-
management-accounting-principles.pdf

Codjia, M. (2017, September 26). The Key Activities of Management Accounting. Retrieved
from https://bizfluent.com/facts-6750338-importance-budgetary-control-management-
accounting.html

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