Introduction
Management accounting refers to the branch of accounting that provides relevant data and information (both financial and non-financial) that helps the management to make informed decisions, to make future plans and policies and to control business activities. Information provided by management accounting are used for internal purpose only.
Objectives Of Management Accounting
The main objectives of management accounting can be expressed as follows:
1. To Measure The Performance
Management accounting measures the efficiency, performance, productivity and effectiveness of the business.
2. To Provide Information
Management accounting provides relevant information and data for planning, forecasting, controlling and resource utilization.
3. To Assist Decision Making
It helps the top level management to take various decisions regarding planning, pricing, forecasting, replacement etc.
4. To Motivate Employees
It helps to motivate employees by setting goals and by preparing motivating schemes in order to boost their performance.
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5. Utilization Of Resources
Management accounting ensures effective utilization of resources in order to achieve organizational goals and objectives effectively.
6. To Facilitate Controlling
Management accounting helps to maintain effective control system in the organization.
7. Cost Control And Fix Price
It helps the top level management to control unnecessary costs and minimize wastage. It also helps to fix the price of the products or services .
8. To Manage Risk
Management accounting helps to identify the possible risk (both financial and operational risks) and suggests to take appropriate steps to minimize it.
9. To Establish Better Communication And Coordination
It facilitates proper communication and coordination between different departments, units, sections and among the members in the organization that helps to reduce misunderstanding and confusion in the workstation.
