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Management accounting can be viewed as Management-oriented Accounting. Basically it is the study of managerial aspect of financial accounting, "accounting in relation to management function". It shows how the accounting function can be re-oriented so as to fit it within the framework of management activity.

Any form of accounting, which enable a business to be conducted more efficiently, can be regarded as Management Accounting
-Institute of Chartered Accountants, England

Management Accounting is concerned with accounting information that is useful to management.


No Fixed Norms Followed:In financial accounting, we follow different norms and rules for creating ledgers and other account books. But there is no need to follow fixed norms in management accounting. Management accounting tool may be different from one organization to other organization. Using of different tools of management accounting is fully dependent on the persons who are using it. So, business policy of each organization affects rules and regulation of applying management accounting.

Increase in Efficiency:It is the nature of management accounting that it is used for increasing in the efficiency of organization. It scans the points of inefficiency through analysis of accounting information. By taking action for improving, organization can increase the efficiency

Supplies Information not Decisions:Management accountant supplies accounting facts and information and also provides interpretation, but decision making is fully dependent on higher authorities. Management accounting is just guide.

Concerned with Forecasting :It is the temperament of management accounting that it is fully concerned with forecasting. In management accounting, historical accounting information is analyzed through common size financial statement, ratio analysis, fund flow analysis and accounting data tendency for knowing the probability of next fact.

Financial accounting Cost Accounting Internal Audit Budgetary control Inventory Control Taxation Statistical Methods Interim Reporting

Provides data: Modifies data Analyses and interprets data Serves as a means of communicating Facilitates control Uses also qualitative information

Management versus Financial

Primary users Purposes of information Management Accounting Internal the companys managers Help managers plan and control operations Financial Accounting External investors and creditors Help with investment and credit decisions

Focus and time dimension

Type of report

Relevance of information; focus on the future

Internal reports No audit needed Detailed reports on a weekly or daily basis Concern about how reports affect employee behavior

Relevance and reliability of information; focus on the past

Financial statements prescribed by GAAP Audit by CPAs Summarized reports quarterly and/or annually Concern about adequate disclosure

Scope of information Behavioral

Management versus Cost Accounting

Management Accounting Cost Accounting

Primary objective

To represent the cost data to increase the efficiency of management

It is mainly future-oriented

To determine and record the cost per unit of products or services

It is based on past and present facts Follows certain priciples,proformas & procedures


Principles, Procedures & Proformas

Does not follows any proformas,principles for reporting


Information provided are useful only to the management

It is wider

Information provided are useful to external and internal parties

It is narrow