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MANAGEMENT ACCOUNTING
MEANING,NATURE , SCOPE ANDLIMITATIONS
Under Guidance of :Dr. P.V. RajeevPresented By:Mayank AnandM.B.A. 2nd Sem.Roll No. 16
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The Definition given by the American Management Association as follow:
Management Accounting is the application of appropriate technique and
concept in processing historical and projected economic data of an entity toassist management in establishing plan for reasonable economic objective in
making of rational decisions with a view towards achieving these objective.
The Definition given by Management Accounting Team of Anglo American
Council of Productivity as follow : Management Accounting is the presentation of accounting information in
such a way as to assist management in the creation of policy and in day to
day operations of an undertaking.
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IDENTIFICATION ANDMEASUREME
NT
ACCUMULATIONANALYSIS
PREPARATIONAND
INTERPRETATION
COMMUNICATION
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Rovide da
Provide Data for management planning
Modifies Data Analyses and Interprets Data
Serves As a means of communicating
Facilitates Control
Uses also Qualitative Information
Facilitates Decision-making
F
UNCTIO
NSOF
MANAGEMENT
ACCOUNTING
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SCOPE OF MANAGEMENT ACCOUNTING
FINANCIAL ACOUNTING
COST ACCOUNTING
REVALUATION ACCOUNTING
BUDGETARY CONTROL
INVENTORY CONTROL
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SCOPE OF MANAGEMENT ACCOUNTING
STASTICAL METHODS
INTERIM REPORTING
TAXATIONS
OFFICE SERVICES
INTERNAL AUDIT
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LIMITATIONS OF MANAGEMENTACCOUNTING
LIMITATIONS OF BASIC RECORDS
PERSISTENT EFFORTS MANAGEMENT ACOUNTING IS ONLY ATOOL
WIDE SCOPE
TOP HEAVY STRUCTURE
OPP
OSITIO
NTO
CH
ANGE
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1.OBJECT. - The object of financial accounting is
to record various transactions with the purpose
maintaining accounts and to know the financialposition and to find out profit loss at the end of
the financial Year these records are useful to
shareholders, creditors, bankers, debenture
holders, etc.
Management accounting is essential to help
management in formulating policies and plans.
MANAGEMENT ACCOUNTING VS.FINANCIAL ACCOUNTING
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Contd..2.NATURE. - Financial accounting is mainly
concerned with the historical data. it recordsonly those transactions which have alreadytaken place.
Management accounting deals with projection ofdata for the future.
3. SUBJECT-MATTER. - Financial accounting is
concerned with assessing the results of thewhole business.
While management accounting deals separatelywith different unit, department and cost centers.
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Contd..4 .COMPULSION.-The preparation of financial accounts iscompulsory in certain undertakings while these are a
necessity in other.
Management accounting is not compulsory. It is only aservice function and is helpful to the management inadministration of the business.
5. PRESISION. - In management accounting no emphasisis given to actual figures. The approximate figures areconsidered more useful then the exact figures.
In financial accounting only actual figures are recordedand there is no room for using approximate figures. Thetransactions are recorded only when they have takenplace so exact figures are used.
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Contd..6. REPORTING. - Financial accounting are prepared to
find out profitability and financial position of the concern.
Management accounting reports are meant for internaluse only. These are prepared for the benefit of differentlevels of management.
7. DESCRIPTION. - Only those things are recorded infinancial accounting which can be measured in monetaryterms. Anything which cannot be recorded in figures isoutside the scope of financial accounting.
Management accounting uses both monetary and non-monetary events.
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Contd..6. REPORTING. - Financial accounting are prepared to
find out profitability and financial position of the concern.
Management accounting reports are meant for internaluse only. These are prepared for the benefit of different
levels of management.
7. DESCRIPTION. - Only those things are recorded infinancial accounting which can be measured in monetaryterms. Anything which cannot be recorded in figures is
outside the scope of financial accounting.
Management accounting uses both monetary and non-monetary events.
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Contd..
8. QUICKNESS.- Reporting of management
accounting is very quick.
Financial accounting is slow and time consuming
9. ACCOUNTING PRINCIPLES. - financial
accounting are governed by the generally accepted
principles and conventions.
No set principles are followed in management
accounting
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Contd.. 10. PERIOD. - Financial accounting are prepared
for a particular period. Profit and loss account isgenerally prepared for one year.
Management accounting supplies information fromtime to during the whole year.
11. PUBLICATION. - Financial accounting like profitand loss account and balance sheet are publishedfor the benefit of public.
Management accounting statements are preparedfor benefit of the management only and these arenot published.
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Contd.. 12. AUDIT. - Financial accounts can be got
audited. Under company law, auditing of
financial accounts is compulsory.
Management accounting cannot be audited.
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