While evaluating the performance of each department of an organization, management accounting can spot the efficient and inefficient sections of an organization. Therefore, presentation and analysis of accounting data may vary from one organization to another. On the other hand, financial accounting totally depends on certain rules and principals. Thus, no fix norms are used in application of management accounting.

No doubt, tools of management accounting are same, but at the same time uses of these tools depend upon need, size, and structure of any organization. This all is done through management accounting with the help of budgetary control and standard costing. Corrective measures are used if there is any deviation in actual and targeted task. Achieving Tasksįinancial data is used to set targets of the company and to achieve them. Studying various alternative decisions, studying impact of financial data on future, supplying useful data to management, helping management to take decisions is a part of management accounting. Special Technique and Conceptsīudgetary control, marginal costing, standard costing are main techniques used in financial accounting for successful financial planning and analysis, and to make financial data more useful.

Therefore, cause and effect is a feature of management accounting. It works to find out the causes for loss and also study the factors which influence the profitability. One step further from financial accounting, management accounting works to know the reasons of profit or loss of an organization. Information is collected and classified by the financial accounting department, and presented in a way that suits managerial needs to review the various policy decisions of an organization. In this section, we will discuss the main characteristics of management accounting. Management accounting provides data to the management on the basis of which they take decisions to achieve organizational goals and improve their efficiency. Management Accounting includes the methods and concepts necessary for effective planning, for choosing among alternative business actions, and for control through the evaluation and interpretation of performance. Institute of Chartered Accountants of England and Wales defines management accounting as:Īny form of accounting which enables a business to conduct more efficiently can be regarded as Management Accounting.Īmerican Accounting Association defines management accounting as:

Intro to financial accounting notes