MANAGEMENT

ACCOUNTING CONCEPTS

By: Shreedhar Acharya

Lecturer, Little Angel’s College of Management
 Management Accounting is the process of identifying,
measuring, accumulating, analyzing, preparing,
interpreting and communicating relevant data and
information (in the form of reports) to the management
that helps them to formulate new policies and regulate
daily operations for the achievement of the
organizational objectives efficiently and effectively.

DEFINITION
 Basically, Accounting information is used to make decisions.

 Users of Accounting Information:

 Top management for Long-term policy making
 Middle Management for Mid-term planning and controlling
 Lower/Line Management for Short term planning and daily operations
 External Parties like government, investors, etc. to make decisions about the
company

ACCOUNTING AND DECISION

MAKING
1. Scorecard questions: Am I doing well?
2. Attention-directing questions: Which problem should I prioritize?
3. Problem solving questions: Which is the best way to do this Job?

ACCOUNTING INFORMATION MUST

ANSWER 3 TYPES OF QUESTIONS/ USES OF
ACCOUNTING INFORMATION
 Historically, ideas of management were developed for manufacturing
organizations.
 But, now, ideas have evolved and they apply for all kinds of organizations.
 Service organizations: Accounting firms, law firms, banks, insurance, hotels,
etc.
 Features: Labor intensive, output is usually difficult to define, major inputs
and outputs cannot be stored.
 Non-profit organizations: hospitals, schools, libraries, museums, government
agencies, etc.

MANAGEMENT ACCOUNTING IN SERVICE

AND NON-PROFIT ORGANIZATIONS
 The process of weighing estimated costs against the probable benefits, is
the primary consideration in choosing among accounting systems and
methods.
 For e.g. Managers chooses among the available accounting systems based on
their cost and benefit

COST-BENEFIT BALANCE
 “ the system’s effect on the behavior(decisions) of the managers.”

 For instance, the bought system must provide accurate, timely budgets and
performance reports in useful format to the management.

BEHAVIORAL IMPLICATIONS
MANAGEMENT PROCESS AND
ACCOUNTING
 “Concentrating on the areas that deviate from the plan and ignoring
areas that are presumed to be running smoothly.”
 This approach frees managers from needless concern with those phases of
operations that are sticking to the plans.

MANAGEMENT BY EXCEPTION
ROLE OF ACCOUNTANTS IN:
CONTRAST THE FUNCTION OF
TREASURER AND CONTROLLER:
CURRENT TRENDS IN
MANAGEMENT ACCOUNTING
Thank You!
Any queries ?