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Finance & Accounting
Pages 4 (1004 words)
This paper will analyze the notion of the Management accounting. The purpose of the paper is to distinguish the role that management accounting plays for the stakeholders of an organization in the proses of decision making. Further It also investigates the data sources for the management accounting and its advantages…
Management accounting is not a specific system of accounts, but could be any form of accounting which enables a business to be conducted more effectively and efficiently. Management accounting in the words of Robert S. Kaplan, is a system that collects, classifies, summaries, analyses and reports information that will assist managers in their decision making and control activities (Institute of cost and works
Accountants of India, n. d, p.4)
Accounting may be defined as “the art of recording, classifying, and summarizing ... transactions and events and interpreting the results thereof” (Introduction to managerial accounting, n. d, p.2). Two types of accounting are usually taking place in organizations; financial accounting and management accounting. Financial accounting and managerial accounting are entirely different things even though some people perceive both as same thing. Financial accounting is a reporting method to stakeholders outside the organization whereas management accounting is a reporting method intended for the stakeholders inside the organization. In other words, management accounting helps managers inside the organization to take sound decisions. Management accounting is a multifaceted entity and therefore it undergoes various processes like data collection, analysis, interpretations, implementations of decisions etc. Management accounting can be considered as an extension to cost accounting since it uses many of the data used for cost accounting. ...
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