The term management accounting refers to accounting for the management. Management accounting provides the necessary information to assist the management in the creation of policy and in the day-to-day operations.
It enables the management to discharge all its functions i.e. planning, organization, staffing, direction, and control efficiently with the help of accounting information.
Definition
“Management accounting is concerned with accounting information that is useful to management”.- R.N. Anthony.
“Management accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and in the day-to-day operations of an undertaking”- Anglo American Council of Productivity.
Objectives of Management Accounting
The objectives of management accounting are:
- To assist the management in promoting efficiency. Efficiency includes best possible services to the customers, investors, and employees.
- To prepare budgets covering all functions of a business ( i.e. production, sales, research, and finance).
- To analyze monetary and non-monetary transactions.
- To compare the actual performance with the plan for identifying deviations and their causes.
- To interpret financial statements to enable the management to formulate future policies.
- To submit to the management at frequent intervals operating statements and short-term financial statements.
- To arrange for the systematic allocation of responsibilities.
- To provide a suitable organization for discharging the responsibilities.
In short, the objective of management accounting is to help the management make decisions and implement them efficiently.