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Management accounting - Essay Example

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Management accounting

The decisions also help in reducing cost that a company incurs in day to day activities. The second one is by assisting the management in controlling and directing the operations of the company. A company that has well organised activities achieves efficient use of resources, (Chandler, 1977). The third one is that the information motivates employees and managers to achieve the targets set. The targets are set in a participatory manner and, therefore, every worker has their views taken into consideration. The fourth one is by measuring the performance of every aspect in the business, for example, employees, managers and departments. The last one is that the competitive position of the company is gauged. This ensures measures can be taken to increase the company’s long-run competitiveness over others in that particular industry. The business thus controls a large portion of the customer share which ensures high profits. Management via accounting is so crucial today because managerial accountants are important members of any management team. Managerial accountants play an important role of providing strategic decisions as well as day to day decisions. The decision making process is complex and requires specialists from management accounting as well as other financial disciplines. The day to day operations would be very expensive and tiring if management accountants do not plan them in advance. This is what makes management via accounting very important in modern business enterprise. These enterprises use the accounting and statistical information to ensure the smooth running of business activities. Business activities that are well managed lower the internal cost of running a business. It also ensures intensive use of resources in the business thus avoiding wastage. The business is also sure that customers pay for their goods and services in time and that suppliers deliver stock and are paid when due, (Capa Centre For Aviation, 2013). Management by using accounting is a field concerned with the efficient use of data from accounts. The managers of a company or business organisations use this information to help them make decisions that assist them to better manage and control resources, with the end goal of increasing the profitability of a company, (Kieso, 2005). The use of accounting data to manage a business is often confused to be financial accounting. This is not true because of several aspects that are related to management accounting information. The first aspect is that management accounting information is forward looking. This means that managers use data to plan for the future and determine how they can control situations that seem will be bad for the company. Managers can also use this data to improve situations that appear will be favourable to the company. For example, if managers predict a certain good sales will increase by 50%, they can employ more sales staff to increase the sales to 60%. This is an example how management via accounting can serve as a good tool to increase the profitability of a company and ensure that it becomes a multi-national business. Other managers use historic information to make decisions that will affect the company. This approach might be accurate but not as effective as that from management via accounting, (Dameri, 2013). The second aspect that mangers use from management accounting is the assurance with which a plan made using management accoun ...Show more

Summary

Management Accounting Name Institution Management Accounting Managers, nowadays require information for most of the managerial functions in a company. This information comes from a number of sources, for example, economic analysts, financial analysts, sales and marketing persons and the company’s accounting system…
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Management accounting essay example
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