ADVANTAGES OF

MANAGEMENT
ACCOUNTING
1. Management’s need for information: the various levels of
management are concerned with different issues, each of which requires
unique information. Complete and detailed information in respect of every
aspect of business has to be collected and analyzed, which is possible only
with management accounting.

2. Efficient planning & effective organization: management

accounting leads to efficient planning and effective organization policies.
Programmes and strategies are formulated with the help of available
information. A sound & effective internal control and audit system can be
developed.
3. Better Decision Making: Management accounting helps in effective
decision making for an organization. It supplies all required information in
the form of charts, tables, and forecasts to the management team. All this
information enables managers in performing detailed analysis and taking
correct decisions.

4. Increase Business Efficiency: It aims at increasing the overall

efficiency of the business. Management accounting using scientific
techniques evaluates the performance of the business and detects
deviations and problems. It takes corrective measures accordingly to
remove defects that enhance business productivity.
5. Raises Profitability: Management accounting assists in increasing
business profitability. It enables in cutting the extra expenditure involved
in business activities using capital budgeting and budgetary control.
Companies are able to reduce the cost of their products and earn better
profits on them.

6. Motivates Employees: Management accounting serves as a tool for

motivating employees. It prepares and presents periodic reports regarding
operations of the business to the management team. Managers are easily
able to evaluate the performance of employees and takes decision
regarding promoting or demoting them accordingly.
7. Reliability: The information provided by management accounting is
reliable as it uses proper scientific tools for analysis purposes. Accurate
and genuine information available to managers enables them to the
effective management of business affairs.

8. Cost Transparency: transparency of cost is another important role

played by management accounting. It properly monitors all cash inflows
and outflows of business and ensures that there is no misuse of money.
Management accounting ensures that all expenses are within budget.
9. Efficient Management Control: Since the Management Accountant
makes use of the budgetary control, standard costing etc., it is possible to set
the standards or targets and compares them with the actual accomplished.
The comparison enables to identify the areas wherein the company has failed
to reach the targets

10.Analysis and Interpretation of Financial Data: Business activities

generate large data and the managerial personnel may not be in a position to
understand them as they are highly technical in nature. Management
Accountant undertakes the responsibility of analyzing and interpreting the
financial data, and presenting the same to the management in a simplified
manner for the purpose of taking necessary action.
THANK YOU