Importance Of Management Accounting
What is management accounting?
Management accounting combines accounting, finance and management with the business skills and techniques that company will need to add real value to any organization. It is also the broadest area of accounting and includes tax accounting, financial accounting, managerial accounting and internal auditing and include cost accounting, cost management, activity management and investment management. However, there are some reasons why management accounting is important for the company. As we know, the primary purpose of management accounting is to provide information useful for management decisions which are planning and control.
Every organization has managers. These managers have a responsibility to the stakeholders
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These include variation that results from common causes and variation that results from special causes. Variation that results from common causes is attributed to the faults or randomness of the system, while variation caused by special causes might be attributed to a particular worker, group of workers, a specific machine, or some local condition. There were estimated that ninety-four percent of the variation within a system is attributable to common causes, i.e., problems caused by the system itself, although most of the blame is placed on the people working in the …show more content…
In response to these needs, there have been many important developments, in both management accounting research and practice, that focus on the use of accounting data and related information regarding strategy and operations for these purposes. Here are some of the most important developments in strategic planning and control which are:
1) The balanced scorecard, a comprehensive set of performance measures designed to assist managers in implementing competitive strategies and monitoring performance with respect to them.
2) Strategic variance / profitability analysis, systems which decompose measures of budgeted versus actual net income into variances which managers can relate logically to a firm 's or strategic business unit 's (SBU 's) mission and business strategy and therefore use to analyze performance from a strategic perspective.
3) Profit-linked performance measurement systems, models which decomposed measures of changes in profitability over time into measures of changes in constructs such as productivity and price recovery, which can be logically linked to a firm 's mission and business strategy and analyzed from those
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