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Thursday, 16 April 2015

MANAGEMENT ACCOUNTING (Theory)


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NATURE AND PURPOSE OF MANAGEMENT ACCOUNT
Management Accounting is the application of professional knowledge and skill in the preparation and presentation of accounting information in such a way as to assist management in the formulation of policies in planning and control of the undertaking.


Management accounting is concerned with identifying, presenting and interpreting information used for planning and control of an enterprise operation.

Management accounting involves data gathering, analyzing, processing, interpreting and communicating the reporting information for effective planning decision marking and operations.

Management accounting uses data from the financial and cost accounting systems and Statistics.  Management accounting also uses statistics and operations research for analysis.

Management accounting produces information: which is relevant for the intended purpose.  Management accounting is concerned with helping management to run a business efficiently.

Purpose of Management Accounting
The main Purpose of management accounting is the provision of information used for:

a.       Formulating strategy
b.      Planning and controlling activities
c.       Decision making
d.      Optimization use of resources
e.      Disclosure to shareholders and employees
f.        Safeguarding the assets

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