Different Trends of Management Accounting - Assignment Example

Address 2008-10-12 Different trends of Management Accounting Management accounting is the study of managerial aspects of accounting. The emphasis's of managements accounting in such a way that it is helpful to the managements in formation of policy, control of execution and appreciation of effectiveness. It is the system of accounting which helps management in carrying out its functions more effectively. According to Robert N. Anthony: "Management Accounting is concerned with accounting information that is useful to management" (1) Management Accounting and Financial accounting are the two branches of the accounting -Financial accounting is concerned with the recording of day-to-day transactions of the business. These transactions enable the concern to find out profit and loss for a particular period and financial position of the concern also. On the other hand, management accounting uses financial accounts and taps other sources of information too. The accounts are used in such a way that they are helpful to the management in planning and forecasting various policies. Thus, financial accounting has significant influence on management accounting. A non profit organization or Charitable organizations also known as not-for-profit were legally organized by the object to support or engage in activities(clubs), service to public or private(hospitals) make the best person for our nation by giving teaching (schools) without any commercial or monetary profit. But in many countries non profit organizations run as charities but not for only charitable organizations. They do not prepare trading and profit and loss account. But they want to know (i) whether their current incomes are sufficient to meet current expenses, and (ii) what their financial Position is at the end of each period. Therefore, they prepared an account each year called income and expenditure account, setting out all incomes (or revenue receipts) on the right hand side and all revenue expenses on the left hand side. The comparison of two sides shows whether o not current expenses are being met out of current income. ________________________________________________________________________ 1. Anthony, Robert N., "Managements accounting" Name 2 But on the other hand the organizations started for the purpose of making profits to them. In the profit making organizations firms prepare accounts to understand their day to day transactions dealings etc., and by the understanding of accounting positions the management wants to take actions for the smooth running and improving the profit of the business. The principles of preparing the profit and non profit accounts are exactly the same as each other. By the preparation of the management accounting the company can increases the efficiency of business operations, the management is able to proper planning with the help of accounting information like the technique of budgeting is helpful for various activities, the systems of budgetary control and standard costing enables the measurement of performance, the thrust of management techniques leads them to control cost of production and increase the efficiency of each and every individual in the organization leads of decrease of cost and increase of profitability, by the control devices in managements accounting enable the reduction of prices and improves the quality and number of products leads to the good product service to the customers and last it leads to the effective Management control in planning, coordinating and controlling g activities of the concern. The scopes of management accounting system i.e., financial accounting, cost accounting, financial management, budgeting and forecasting , inventory control, reporting to management, interpretation of data, control procedures and methods, internal audit, tax accounting, office services etc are stands a very important role. If I become a manager of a blockbuster store, I prefer mechanized accounting information. The small concerns the numbers of transactions are limited but on the other hand the big concerns need the use of mechanical aids in collecting, recording and analyzing accounting data. Mechanized accounting is associated with the use of automatic machines for recording, classifying, posting, balancing, and analyzing the day-to-day records of the business. Mechanized accounting is advantages to business by the saving of time, reduces monotony of work, accuracy, account keeping is up-to date, better conditions of services, helpful in better management of the concern, scientific research, advantages to public by the prompt service, inspires confidence, reduction in costs, and miscellaneous advantages by job satisfaction to employees. The time of balanced scoreboard is gone out; at this time the performance scoreboard is winning. By the analysis of competitive environment of the marketing of the products only management can get the correct objectives and the route to how to get the result. The performance calculation is connected to the organizations strategy. Financial measures indicate to performance scoreboard to be helped to management. These measures will be formed to get short term results against the expenses of long term results. These all measures are performed through the outcome sources to complement the organization's strategy. For this the following steps must be taken. Identify a specific business unit, select this unit, select some performance measures, forecast the goal, discuss these target with the management and staff, encourage the employees for this goal communicate this to all levels of the business units. The management must understand and take decision of the correct way implementing the tools in the business. The skilled employees, easy production and less cost, must know the trends up-to-date, quality of the product, price of the product, customers satisfaction, effective communication all are the main components of tools. The balanced scoreboard is a winning strategic tool in US. This enables the organization to perform to try all of the factors. But in time the performance scoreboard is much more result in business. In the last decade there was repulsion in management accounting theory and practice due to the tackle in the business environment. The failing and obsolescence of the traditional cost and presentation management accounting leads to rethink of the new management accounting system. By this management accounting, firstly paying attention to decision making tools for the smooth running and the maximum return from the business. Management accounting includes the financial accounts and both the internal and external aspects. As a result to this the management takes the new decision on the internal external factors. The traditional management can't approach the public directly but new management approaches the trends, social effects, among other. In the last decade the government policies, training programs are approached effectively. This decade the management accounting is as IT accounting management. In this era management can understand the society's changes, the trends, different situations with in seconds. By this they can establish the strategic planning's, if it is in a good condition or profitable manner. By the forecasting and other steps the new management can take instant steps for the development of the organization. ________________________________________________________________________ Work Cited 1. Anthony, Robert N., "Managements accounting" Read More