COST AND MANAGEMENT

ACCOUNTING 2

DPA 6023
 SHUBASHINI A/P SEVARAM 06DAT15F2045
 PAVITRA A/P B.MOHAN 06DAT15F2015
 SHARVIN A/LSUPERMANIYAM
06DAT15F2049
 HAARVIN A/L SUNDRAPANDIAN 06DAT15F2058
 4.1 DEFINITION OF
MANAGEMENT ACCOUNTING
 Divided into 2 types:
a) Financial Accounting
b) Management Accounting

 Managerial Acc is concerned with providing into to

manage,inside an organisation who direct and control.

 Management accounting is the process of measuring and

reporting information about economic activity within
organization,for use by managers in planning ,performance
evaluation and operational control.
 IMPORTANCE OF
MANAGEMENT ACCOUNTING
 Planning : To identify alternatives and to select from among
alternatives the one that does the best job of furthering the
organization’s objective.

 Performance evaluation :Evaluating the profitability of

individual products and products line.

 Controlling :Managers ensure that the plan is being followed.

 Determination of aim :Available to determine its goal and

tries to find out the route through which it can reach the goal.
 SIMILARTIES OF MANAGEMENT
ACCOUNTING & FINANCIAL
ACCOUNTING
 Both method allow the reader to make a conculasion on the health
of the business.

 Allowing them to make financial decision that must be made.

 Both are determining and measurement of costs for different

accounting periods and even for different departments and section.

 Both the system of accounts are accumuating and classifying the

accounting information for the preparation of financial statements.
 Differences between Management
According&Financial Accounting
Management Accounting
Users Internal
Purposeof information Help managers plan and
control business operations
Nature More subjective and
judjemental,valid,relevant
and accurate
Timeless Current and Future oriented Delayed or Historical
Reliabilty Emphasis on reliability of
the information
Report frequency A detailed set of financial
account is publised
annually
Financial Accounting
External
Help investor,creditior, and
other make
investment,credit and other
decision
Objective,auditable
,reliable,consistent and
precise
Include many subjective
estimates
Repaorts on various
activities may be prepared
 Role of Management Accountant
Planning Selective a course of action and specifying how the action
will be implement
Implemetation Provide structure and capacity in which the management duties
to achieve what was planned either in department,branch or
division.Its requires the full expertise and capabilities
Directing Mobilizing people to carry out plans and run routine operations
Controlling A prosess ensuring that activities were carried ouut ad were
appropriately modified as circumstances change in an
organisation.Requires accurate information to be reported on
the corretive steps an be done quickly.
 Definition of Management
Accounting Information
 Focus at internal managers and decision makers
 Comes in the form of financial ratios,budgets
forecasts,variance analysis and cost accounting
 Aims to assist management in planning,controlling
and decision making in an organizational activities
 The process of preparing management report and
account that provide accurate and timely financial
and statistical information required by managers to
make day-to-day and short term decision
 Relevant
Relevant

Understable
Understable
With
With cost
cost
benefit
benefit features
features

Features of
management
accounting
information
Reliable
Reliable and
and
complete Timely
Timely
complete

Comparable
Comparable
 Relevant:-
i. A selection of information that give different results for the
activities
ii. Relates to the future

 Understandable:-
i. Must be understood well the manager
ii. Appropriate for the management accountant used the accounting
term that can be understandable
 Timely :-
 Information is gathered before it happens

 Comparable
 Must be compared with times,location ,function,department and etc
 Reliable :-
 Relate to the future

 Complete :-
 Information that is gathers and collects without leaving out
important and useful information

 Cost benefit features

 Must provide useful information on returns atleast cover
the cost of providing such information