Management Accounting And Decision Making

Management accounting is the process of gathering information about economic activity that will be advantages for the organisation. Management accounting is trusted to guide critical business decision and drive strong business performance. The provision of management accounting information is for the intention of planning, control and decision-making which may contribute to the success of an organisation. Such information is financial and cost accounts and that must be relevant information. An economic activity can be conducted correctly if the decision, the implementation and the control of the execution are based on operative, accurate and complete information.

Management accounting information can help in planning company future position

A primary objective of management accounting is to achieve optimum utilization of the business's capital or resources. Effective decision making requires relevant information and special analysis of data. Some needed information cannot get from the financial statements, such as estimate, forecasts, future data, and standards. There are consist two type of decision making that which is strategic and tactical, short-run and long-run. Whether a decision is good or acceptable depends on the goals and objective of management. Consequently, a prerequisite to decision making is that management has set the organisation's goals and objective. The strategic decision is a broad-based, qualitative type of decisions which includes or reflect goals and objective. It is non-quantitative in nature and is based on subjective thinking of management concerning goals and objective. The tactical decision is quantitative executable decisions which result directly from the strategic decisions. Management accounting pertains primarily to the tactical decision, does not typically provides techniques for assisting in making strategic decisions. Once a strategic decision has been made, then a specific management tool can be used to aid in making the tactical decision. The choice between the short-run or the long-run is particularly critical concerning the setting of

The identification of the organisational structure and a better understanding of the methods for determining the authority and the distribution of responsibility are essential in the determination of information in an economic entity. Instead, the necessary information defines the structure of the collected data and processing activities from management accounting information system. Management accounting information also very important in control method. Management accounting sustains the verification process of the method and the extent to which the proposed objectives have/have not been accomplished, elaborating the reports that should indicate the actual performance opposed to the proposed objectives. Controlling implies monitoring the implementation of policies, correction of any abnormalities, and provides information that allows the analysis of any deviation from the budget and the right decision