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Management accounting is a decision making science.Comment

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Management accounting is a decision making science.Comment

Post by babita.jha on Tue Dec 27, 2016 9:46 am

Do you agree with this statement. Give reasons in support of your answer.

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Re: Management accounting is a decision making science.Comment

Post by kiran.18j on Wed Dec 28, 2016 2:25 pm

In management accounting, managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions. Hence to run small business they require management accounting for taking decision that they should invest on the share or on the business which they want to run. As we can see that in the small business owners are faced with countless decisions every business day. It provides them information about the data-driven input to these decisions, which can improve decision-making over the long term and also these small business managers leverage this power tool to help make their business more successful by understanding how management accounting benefits common business decisions taken by the managers.
Management accounting helps in analysing such as cost analysis, activity-based costing techniques, make or buy analysis, and utilising the data. As the cost analysis is used by company to determine what should be sold and how to sell it. By using activity-based costing techniques, small business management can determine the activities required to produce and service a product line. Hence with the help of this analysis the company are able to determine the incremental ratio on the basis of this manager is able take decision that they should invest or not. Therefore management accounting helps in decision making for the organization.

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Re: Management accounting is a decision making science.Comment

Post by manishnaruka on Wed Dec 28, 2016 5:25 pm

Management accounting is an important decision-making tool used internally by the management. Tools like budgeting, variance analysis cost-volume-profit analysis, BEP are some of the prominent tools used in management accounting.
Management accounting is a tool to assist management in achieving better planning and control over the organization. It is relevant for all kinds of an organization including a not-for-profit organization, government or sole proprietorships. It has a significant place in the businesses and widely used by management to achieving better control and quality decision making.
Management accounting is the practical science of value creation within organizations in both the private and public sectors. It combines accounting, finance and management with the leading edge techniques needed to drive successful businesses.”
In Simple terms, management accounting is the accounting of resources of an organization to ensure optimum utilization. It provides top management with the proper insight to their business operations so that they can optimize utilization of resources and streamline operations.


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Re: Management accounting is a decision making science.Comment

Post by pitamber on Wed Dec 28, 2016 6:50 pm

Management accounting can be viewed as Management-oriented Accounting.Basically it is the study of managerial aspect of financial accounting, "accounting in relation to management function". It shows how the accounting function can be re-oriented so as to fit it within the framework of management activity.The Present complex industrial world, management accounting has become an integral part of management, Management accountant guides and advises management at every step. Management accounting not only Increase Efficiency of the management but it also increases the efficiency of the employees. The term “Management Accounting”, observe, Broad and Carmichael, covers all those services by which the accounting department can assist the top management and other departments in the formation of policy, control of execution and appreciation of effectiveness. This definition points out that management is entrusted with the primary task of planning, execution and control of the operating activities of an enterprise.

some reasons are:
1. Determine of Aim
2. Helps in the Preparation of Plan
3. Better Services to Customers
4. Easy to take judgment: Before taking
  any plan or to determine policy.
5. Measurements of performance
6.  Its Increase Efficiency of the business

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Re: Management accounting is a decision making science.Comment

Post by Diksha Batish on Wed Dec 28, 2016 8:30 pm

Management accounting involves providing useful information to managers for decision-making, planning, and control. Accounting, like science, follows a systematic and organized path to understand the economic status of the entity. Hence, Accounting is a science that comprises of rules, principles, concepts, conventions and standards like science.
However, when it comes to management accounting, the most important factor is the Decision Making which needs to be rational and in the interest of the organization.  It simply includes the implementation of techniques and methods. Management accounting is a wide-open game with few ground rules. Hence, the decision making under management accounting is an art that implies scientific methods to practical use. Views and thoughts about whether management accounting is an art or science may differ from person to person. However, according to me, processes and methods used in accounting can be underlined as scientific, and the decisions and estimation making can be classified as an art. In other words, the rules and principles are the science part of the “accounting” and choosing the way to use them are considered as an art.

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Re: Management accounting is a decision making science.Comment

Post by kirti sharma on Wed Dec 28, 2016 9:44 pm

“Management accounting is the practical science of value creation within organizations in both the private and public sectors. It combines accounting, finance and management with the leading edge techniques needed to drive successful businesses.”
In Simple terms, management accounting is the accounting of resources of an organization to ensure optimum utilization. It provides top management with the proper insight to their business operations so that they can optimize utilization of resources and streamline operations.
Management accounting is not a layman’s job but educated professionals are required to do this kind of accounting. There are institutions that produce qualified management accountants.
Management accounting is a tool to assist management in achieving better planning and control over the organization. It is relevant for all kinds of an organization including a not-for-profit organization, government or sole proprietorships. It has a significant place in the businesses and widely used by management to achieving better control and quality decision making.
Management accounting is an important decision-making tool used internally by the management. Tools like budgeting, variance analysis, cost-volume-profit analysis, BEP are some of the prominent tools used in management accounting.

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Re: Management accounting is a decision making science.Comment

Post by Ritu kanojia on Wed Dec 28, 2016 10:10 pm

Management Accounting is the process of analysis, interpretation and presentation of accounting information collected with the help of financial accounting and cost accounting, in order to assist management in the process of decision making, creation of policy and day to day operation of an organization. Thus, it is clear from the above that the management accounting is based on financial accounting and cost accounting.

Following are the objectives of Management Accounting:

1) Measuring performance: Management accounting measures two types of performance. First is employee performance and the second is efficiency measurement. The actual performance is measured with the standardized performance and a report of deviation from the standard performance is reported to the management for the effective decision making and also to indicate the effectiveness of the methods in use. Both types of performance management are used to make corrective actions in order to improve performance.
2) Assess Risk: The aim of management accounting is to assess risk in order to maximize risk.
3) Allocation of Resources: is an important objective of Management Accounting.
4) Presentation of various financial statements to the Management.
Because of the above reasons management accounting helps in the decision making process.

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Re: Management accounting is a decision making science.Comment

Post by Himani Banga on Wed Dec 28, 2016 10:38 pm

Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information. Management accounting is used by management to make major decisions like what to sell, how to sell, where to sell etc. To evaluate this decision, an accounting manager could examine the costs that differ between advertising alternatives for each product, ignoring common costs.

Management accounting also helps in make decision of weather company should buy or manufacture a component needed to manufacture the company's primary product. After making this analysis of manufacturing or buying, it can determine which choice is more profitable.

Managerial accounting information provides a data-driven look at how to grow an organisation. Budgeting, financial statement projections and balanced scorecards are examples of how managerial accounting information is used to provide information to help management guide the future of an organisation. By focusing on this data, managers can make decisions that aim for continuous improvement.

With the help of management accounting managers can estimate and manage the cost and profitability of their products and customers. Management Accounting reports generally show the orders in hand, sales revenue, available cash, accounts receivable, raw material and inventory, accounts payable and outstanding debts. These reports further include variance analysis, and other statistics which will help managers in the decision making process. Management accounting helps in taking day to day decisions making process.


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Re: Management accounting is a decision making science.Comment

Post by REEMA SHARMA on Wed Dec 28, 2016 10:51 pm

Management accounting is a broader term which comprised of basic accounting and financial management. Management accounting is mainly based on cost and sales revenue. Decision making is an important aspect of management. Decision making is an important aspect of managers activities. Every day to day activities and its costing are recorded under accounting but only records are not sufficient for an organization to function. Management accounting is the science which deals with making and analyzing the decisions based on the accounting records. This decision making involves deciding the best alternative among the given options. Successful operation of a business is a direct result of an efficient management decision making. This process not only involves the primary task of decision making but also involves communicating them to other employees so that the its appropriate accuracy is ensured. Some of the popular tools used in management accounting are budgeting, cost analysis, profit analysis and Bep etc. Hence we can conclude that managerial decision making is the prominent tool which gives a proper insight for the functionality of a business.

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Re: Management accounting is a decision making science.Comment

Post by Asif PGFB1653 on Wed Dec 28, 2016 11:04 pm

Management accounting is mainly based on cost and sales revenue. But it is also used as an effective tool for decision making. Planning, decision-making and control are the basic managerial functions. Mere financial data and its analysis and interpretation are not sufficient for decision-making purposes. The management may need qualitative information, which cannot be readily converted into monetary terms. Management accounting does not restrict itself to financial data alone for helping management, it also uses such qualitative information.
The accounting data is analyzed and interpreted meaningfully for effective planning and decision-making. For this purpose the data is presented in a comparative form. Analytical tools such as Comparative Financial Statements, Common-size Statements, budgetary control, inventory control, marginal costing, ratio Analysis etc are used for carrying out such functions efficiently.

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Re: Management accounting is a decision making science.Comment

Post by Ankita Garg on Wed Dec 28, 2016 11:15 pm

Management Accounting is known as decision making accounting. The purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. The process of management accounting is the process of creating and using cost, quality, and time-based information to make effective decisions within the organization. Decision making is the most important step because it is the basis of the future success of the organization. Various decisions like which product to produce, which product to drop and whether to outsource the material or produce are some of the major decisions. Even decisions like how much stock to be produced and minimum stock level also come under management accounting decisions. Thus decision making is a typical scientific process of management accounting which uses scientific tools like CVP Analysis, Incremental Costing etc. Thus we can say that management accounting is a decision making science.

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Re: Management accounting is a decision making science.Comment

Post by Nikita Garg on Wed Dec 28, 2016 11:51 pm

Small business owners are faced with countless decisions every business day. Managerial accounting  provides information and data to help in these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts.In cost accounting various decisions are to be taken by the managers. some are as follows:
1. Managerial accounting information is used by company management to determine what should be sold and how to sell and to whom it should be sold.
2. whether to outsource the material or produce are some of the major decisions. Even decisions like how much stock to be produced and minimum stock level also come under management accounting decisions.
Thus decision making is a typical scientific process of management accounting which uses scientific tools like CVP analysis, incremental costing, budgeting, ABC analysis etc. Thus it can be concluded that management accounting is a decision making science.

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Re: Management accounting is a decision making science.Comment

Post by devendra sharma on Thu Dec 29, 2016 7:28 am

Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts.
Managerial accounting information is used by company management to determine what should be sold and how to sell it. For example, a small business owner may be unsure where he should focus his marketing efforts. To evaluate this decision, an accounting manager could examine the costs that differ between advertising alternatives for each product, ignoring common costs.
Once the company has determined what products to sell, the business needs to determine to whom they should sell the products. By using activity-based costing techniques, small business management can determine the activities required to produce and service a product line.
A primary use of managerial accounting information is to provide information used in manufacturing. For example, a small business owner may be considering whether to make or buy a component needed to manufacture the company's primary product.

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Re: Management accounting is a decision making science.Comment

Post by Shubham Patni on Thu Dec 29, 2016 9:52 am

Yes, I agree with the statement that management accounting is a decision making science.

Management accounting is basically the sourcing, analysis, communication and use of decision-relevant financial and non-financial information to generate and preserve value for organizations. It is a broader term that combines accounting, finance and management with the business skills and techniques that add real value to any organization.

Budgeting, financial statement projections and balanced scorecards are just a few examples of how managerial accounting information which are used to provide information to help management to guide the future of a company. By focusing on this data, managers can make decisions that aim for continuous improvement and are justifiable based on intelligent analysis of the company data, as opposed to gut feelings. The tools and techniques of the management accounting are helpful to the management in planning controlling and coordinating activities of the business, the getting of standard and assessing actual performance regularly enables the management to have ‘management by exception’.

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Re: Management accounting is a decision making science.Comment

Post by Megha Dhyani on Thu Dec 29, 2016 10:26 am

Management Accounting is the process of analysis, interpretation and presentation of accounting information collected with the help of financial accounting and cost accounting, in order to help management in the process of decision making, creation of policy and day to day operation of an organization. Thus, it is clear from the above that the management accounting is based on financial accounting and cost accounting both.So,it is also known as cost accounting.The main objectives of managerial accounting is:

1.)Assess Risk
2.)Allocation of resources.
3.)Measuring Performance: Management accounting measures two types of performance. First is employee performance and the second is efficiency measurement.

According to me Management Accounting is an art not a science as there are no authoritative standards, and no generally accepted management accounting principles that govern management accounting. Tax accounting must follow tax laws and regulations, and use prescribed tax forms. External financial statements have to be prepared in accordance with GAAP. Management accounting is a wide-open game with few ground rules.Hence,the decision making under management accounting is an art that implies scientific methods to practical use.In simple words, principles & rules are the science part of the “accounting” and choosing the way to use them are considered to be an art.

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Re: Management accounting is a decision making science.Comment

Post by prachi gupta on Thu Dec 29, 2016 10:39 am

It is true that management accounting is a decision making science.
Business owners are faced with many hard decisions every day. Managerial accounting provides data-driven input to these decisions, which can ease the process of decision-making over the long term. So managers can rely on this to help make their business decisions profitable and successful.
• Frequency: the management accounting reports are more frequent like daily, weekly or monthly so it help in regularly analyzing the situation and controlling of bad ones.
• Increase efficiency: Management accounting increases efficiency of the business concern. The targets of different departments of the enterprise are determined in advance and the achievement of these goals is taken as a tool for measuring their efficiency.
• Make or buy analysis: it helps in providing information related to manufacturing. For example, a business owner may be considering whether to make or buy a component needed to manufacture the company's primary product. By completing a make or buy analysis, he can determine which choice is more profitable.
• Activity based costing: By using activity-based costing techniques, business management can determine the activities required to produce and service a product line. Deciding which customers are more or less profitable allows the business owner to focus advertising toward the consumers who are the most profitable.
• Maximum profits : with management accounting every possible effort is made to control unnecessary expenses. The unnecessary cost is removed. New systems is found out to achieve the goal, so that there may be maximum profits out of the capital invested in the Business.

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Re: Management accounting is a decision making science.Comment

Post by BHARAT JAIN on Thu Dec 29, 2016 11:30 am

Management accounting is to manage the cost control and accounts of the business. Managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions. Managerial accounting is linked to cost accounting & cost management. Managerial accounting involves generating information for internal users including all levels of management and others within the organization.
According to me Management Accounting is the mixture of both Art & Science because while taking any decision one should be Practical and theoretical. The decision are based on so many factors like budget, accounts, financial status of the organisation.
Because of the need for detailed information about specific operations within a company, management accounting reports are typically much more in-depth than traditional financial accounting reports, such as balance sheet ratios and net income calculations.

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Re: Management accounting is a decision making science.Comment

Post by arpitasharma on Thu Dec 29, 2016 11:33 am

Management accounting is the practical science of value creation within organizations in both the private and public sectors. It combines accounting, finance and management with the leading edge techniques needed to drive successful businesses.

Business owners often use management accounting to track, record and report financial information for managerial review. Management accounting does not usually follow any national accounting standards.Business owners can design management accounting systems according to their company,business operations or management need for business information.

In a general sense, managerial accounting is an integral part of management that deals with identifying, presenting and interpreting information used for strategies, decision making, resource optimization, employee information, asset protection planning and control of activities, information of associates or other external information users,aims to identify the costs, the evaluation of certain elements of the balance sheet, as well as the calculation of the production cost which must be compared to the sales price in order to determine the efficiency of the developed activity, and on the other hand, the cost prediction in order to determine discrepancies from the actual costs etc.

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Re: Management accounting is a decision making science.Comment

Post by Ankit pareek on Thu Dec 29, 2016 1:34 pm

Yes, I agree with the statement that management accounting is a decision making science.
Business owners are faced with many hard decisions every day. Managerial accounting provides data-driven input to these decisions, which can ease the process of decision-making over the long term. So managers can rely on this to help make their business decisions profitable and successful.
According to me Management Accounting is the mixture of both Art & Science because while taking any decision one should be Practical and theoretical. The decision are based on so many factors like budget, accounts, financial status of the organization.
Because of the need for detailed information about specific operations within a company, management accounting reports are typically much more in-depth than traditional financial accounting reports, such as balance sheet ratios and net income calculations. bounce bounce Suspect

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Re: Management accounting is a decision making science.Comment

Post by sonali angelina samuel on Thu Dec 29, 2016 2:36 pm

Managerial Accounting is the branch of accounting that supports company management in planning, decision making, control and analysis. Effective use of this tool by operational management will ensure profitable growth and business optimization. For making business decisions, business owners or managers need financial and economic information relevant and structured according to their needs and analysis of information resources and business results.
But financial statements provided by accounting professionals are hard to be understood, as economic content, and are insufficient for understanding the sources of income and loss of business or to identify ways to stabilize financial and economic optimization of business. It is therefore, necessary to develop managerial accounting business, which means: developing a system for recording financial and non-financial information according to the needs of business management, to monitor sources of income and losses of the business, developing initial reports, analyzes and dashboards on revenues and costs, debts and liabilities, receipts and disbursements, funding needs and sources of business; continuous adaptation of management.

What a Face Very Happy

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Re: Management accounting is a decision making science.Comment

Post by shubhrv on Thu Dec 29, 2016 2:48 pm

Small business owners are faced with countless decisions every business day. Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts.
The most important factor is the Decision Making which needs to be rational and in the interest of the organization.  It simply includes the implementation of techniques and methods. Management accounting is a wide-open game with few ground rules.
Management accounting is a tool to assist management in achieving better planning and control over the organization. It is relevant for all kinds of an organization including a not-for-profit organization, government or sole proprietorships. It has a significant place in the businesses and widely used by management to achieving better control and quality decision making.
Management accounting is the practical science of value creation within organizations in both the private and public sectors. It combines accounting, finance and management with the leading edge techniques needed to drive successful businesses.”

In Simple terms, management accounting is the accounting of resources of an organization to ensure optimum utilization. It provides top management with the proper insight to their business operations so that they can optimize utilization of resources and streamline operations.
The aims behind management accounting are as follows:
1.Taking important strategic decisions about the business
2.Planning for the future business activities
3.Evaluation and monitoring of performance
4.Assisting in decision-making
5.Proper utilization of resources
6.Make the basis for financial reports
7.Asset safeguarding


Here are many management accounting tools. Some important ones are discussed below:
Budgeting and variance analysis: In the organizations, budgets are prepared for every year. They are based on the long-term planning of the organizations and hence assist in achieving long-term goals of an organization. Variance analysis is the comparison of standard budgets and actual outputs. This comparison enables managers to know about the deviations from the plans. The deviations can be good or bad. Positive deviations are called favorable variance and negative deviations are called unfavorable variance.

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Re: Management accounting is a decision making science.Comment

Post by prashantnavlani on Thu Dec 29, 2016 3:30 pm

Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of an organization's goals. This branch of accounting is also known as cost accounting.
Managerial accounting encompasses all fields of accounting aimed at informing management of business operation metrics
Managerial accounting handles margin analysis, the amount of profit or cash flow generated by the sale from a specific product, customer, store or region. Margin analysis involves analyzing the incremental benefit attained by increased production and flows into break-even analysis. Break-even analysis involves calculating the contribution margin on the sales mix to determine the unit volume at which the business’ Gross sales equal total expenditures. This information calculated by managerial accountants is useful for determining price points for products and services.
Managerial accounting involves utilizing information related to capital expenditure decisions. Managerial accountants utilize standard capital budgeting metrics such as net present value and internal rate of return to assist decision makers on whether to embark on capital-intensive projects or purchases.
Science is an inquiry into the relationship of cause and effect about occurrence or happening. Scientific knowledge is obtained by observation and testing of fact. Science is based on well established laws or rules. In management accounting too, recording, classifying and summarizing of business transactions is done on the bases of clear and rational rules. Considerably progress has been made in developing standardized basic accounting principles and accounting practices. Management Accounting, therefore, may be termed as a science. 

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Re: Management accounting is a decision making science.Comment

Post by Aastha Ahlawat on Thu Dec 29, 2016 6:22 pm

Yes I do agree with the statement as Management accounting plays a vital role in decision making such as a small business owners are faced with countless decisions every business day so Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term.
Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts.
Moreover management accounting helps how to utilize the whole data properly and helps in less time consuming and helps in make and buy analysis ,Activity based costing techniques.
Lastly I would like to add one point that the Managerial accounting information is used by company management to determine what should be sold and how to sell it. For example, a small business owner may be unsure where he should focus his marketing efforts. To evaluate this decision, an accounting manager could examine the costs that differ between advertising alternatives for each product, ignoring common costs. This process is known as relevant cost analysis and is a technique that is taught in basic managerial accounting courses. The same process can be used to determine whether to add product lines or discontinue operations. Basketball

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Re: Management accounting is a decision making science.Comment

Post by sadashiv on Thu Dec 29, 2016 7:06 pm

Management accounting is an important decision-making tool used internally by the management. Tools like budgeting, variance analysis,cost volume profit analysis. Break Even Point are some of the prominent tools used in management accounting. It is relevant for all kinds of an organization including a not-for-profit organization Cool

Management accounting is meant for the management to take informed decisions about the business. Reports of management accounting are a secret of the company and hence they are not disclosed to anyone except the core management team who are responsible for taking decision. Wink

Most of the cost accounting techniques are used by management accountants. Other important techniques are incremental analysis, cost behaviour analysis, economic order quantity (EOQ) and economic batch quantity (EBQ), return on investment analysis, safety stock, lead time, segment reporting etc.

Basic aim behind management accounting-

 Taking important strategic decisions about the business
 Planning for the future business activities
 Evaluation and monitoring of performance
 Assisting in decision-making
 Proper utilization of resources
 Make the basis for financial reports
 Asset safeguarding

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Re: Management accounting is a decision making science.Comment

Post by ayushbhatnagar on Thu Dec 29, 2016 8:54 pm

Management accounting is a decision making science:
Right decision gives right direction for a right course of action.  Managerial accounting  information provides data-driven input to small business owners who take countless decisions every day, so the information given by this process will ultimately improve their decision making over long term and help them to make their business more successful understanding how management accounting benefits common business decisions. In a company a manager need continuous information in order to make appropriate decisions. Therefore, the decision making efficiency of manager greatly enhanced by the quality of information they are able to utilize. The aim behind these decisio making process are: Planning for the future business activities, Evaluation and monitoring of performance, Taking important strategic decisions about the business, Proper utilization of resources, Make the basis for financial reports.

In management accounting the decision can be of two types:
1) Short Run
2) Long Run

Short Run :  can be between one year or less. These decisions are mainly based on today’s data. The short term decision can be changed easily. The operating  activities comprises of what managers must do to run the business on day to day basis.

Long Term:  can effect on longer period of time that is why such decision demand a firm’s resources for longer period of time. Long run decisions effect future decisions and have long term impact on long term potentials. Long term decision can be about where to locate plants and other facilities, whether to invest in new production equipment or to introduce new product and services.

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