Objectives of Management Accounts in Management
- 1. DR. M. VADIVEL ASSISTANT PROFESSOR DEPARTMENT OF B.COM PA SRCAS, COIMBATORE.
- 2. Objectives of Management Accounting 1. Assistance in Planning and Formulation of Future Policies 2. Helps in the Interpretation of Financial Information 3. Helps in Controlling Performance 4. Helps in Organizing 4. Helps in the Solution of Strategic Business Problems 5. Helps in Coordinating Operations 6. Helps in Motivating Employees 7. Communicating Up-to-date Information 8. Helps in Evaluating the Efficiency and Effectiveness of Policies
- 3. 1. Assistance in Planning and Formulation of Future Policies: Management accounting assists management in planning the activities of the business. Planning is deciding in advance what is to be done, when it is to be done, how it is to be done and by whom it is to be done. It involves forecasting on the basis of available information, setting goals, framing policies, determining the alternative courses of actions and deciding on the programme of activities to be undertaken.
- 4. 2. Helps in the Interpretation of Financial Information: Accounting is a technical subject and may not be easily understandable by everyone till the user has a good knowledge of the subject. Management may not be able to use the accounting information in its raw form due to lack of knowledge of accounting techniques.
- 5. 3. Helps in Controlling Performance: Management accounting is a useful device of managerial control. The whole organisation is divided into responsibility centres and each centre is put under the charge of one responsible person. He will be associated with the planning and framing of the budgets and be required to execute the plans and standards and deviations are analysed in order to pinpoint the responsibility.
- 6. 4. Helps in Organizing: Thus management accountant recommends the use of budgeting, responsibility accounting, cost control techniques and internal financial control.This all needs the intensive study of the organisation structure. In turn, it helps to rationalise the organisation structure. 5. Helps in the Solution of Strategic Business Problems: Whenever there is a question of starting a new business, expanding or diversifying the existing business, strategic business problem has to be faced and solved.
- 7. 6. Helps in Coordinating Operations: Management accounting helps the management in co-coordinating the activities of the concern by getting prepared functional budgets in the first instance and then co-coordinating the whole activities of the concern by integrating all functional budgets into one known as master budget. Thus, management accounting is a useful tool in coordinating the various operations of the business.
- 8. 7. Helps in Motivating Employees: The management accountant by setting goals, planning the best and economical course of action and then measuring the performance tries his best to increase the effectiveness of the organisation and thereby motivate the members of the organisation.
- 9. 8. Communicating Up-to- date Information: Management accounting assists management in communicating the financial facts about the enterprise to the persons who are interested in these facts so that they may be guided to a line of action to be pursued. Management needs information for taking decisions and for evaluating performance of the business.
- 10. 9. Helps in Evaluating the Efficiency and Effectiveness of Policies: Management accounting also lays emphasis on management audit which means evaluating the efficiency and effectiveness o£ management policies. Management policies are reviewed from time to time to make an improvement in them so that maximum efficiency may be achieved.
- 11. ThankYou……