Learning Materials For Accounting, Management , Finance And Economics.

Sunday, November 1, 2009

Functions Of Management Accounting

Management accounting helps the management to run the business smoothly by providing data and information obtained from cost and financial accounting. Key functions of management accounting are as follows:

1. Helps In Forecasting 

Management accounting gathers important data and information about the business. These data are used for forecasting purpose by the top level management.

2. Helps In Coordinating

Management accounting helps to maintain coordination among different units, departments, sections, branches and employees in the organization

3. Helps In Organizing

Organizing is another major function of management accounting. It ensures better allocation of resources to each levels of management which helps to increase efficiency and productivity.

4.Helps In Controlling

Management accounting practices standard costing and budgetary control techniques which facilitate better controlling in the organization
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5. Financial Analysis And Interpretation.

With the help of trend analysis and ratio analysis, management accounting is useful for financial analysis and interpretation of data.

6. Helps In Communication

After financial analysis and interpretation of data, it supplies necessary information (both financial and non financial) to the users (employees, shareholders, government etc.). So, management accounting can be used as the communication tool in the business organization.

7. Employee Motivation

Employee motivation is another function of management accounting. It motivates the employees by providing monetary and non monetary rewards to the employees on the basis of their performance.

8. Helps In Decision making

Top level management can take quality decisions by using data and information collected, analyzed and interpreted by management accounting.