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Management accounting is a decision making science.Comment

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Re: Management accounting is a decision making science.Comment

Post by ashishgupta on Fri Dec 30, 2016 7:14 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.
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. 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.
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 kshitiz agrawal on Fri Dec 30, 2016 7:44 pm

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. 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. 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. 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 bounce cheers

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Re: Management accounting is a decision making science.Comment

Post by vishal.sawlani on Fri Dec 30, 2016 8:03 pm

Management accounting is an important decision-making tool used internally by the management.

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 not a layman’s job but educated professionals are required to do this kind of accounting.

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 Shipra jain on Fri Dec 30, 2016 9:35 pm

Management accounting deals with management decisions like the type of product to be produced, the volume of productions and budgeting decisions. In management accounting managers use the provisions of accounting information in order to better inform themselves before they decide matters within organization , which aids their  management and performance of control functions.
Goals of management accounting :-
·         Planning
·         Control
·         Decision making
Decision making relies on incremental analysis , as incremental analysis is the appropriate way to approach the solution to all business problems. In management accounting decision making has a set framework for ethical decision making such as:-
·         What decisions alternatives are available.
·         What benefits are there in particular alternative.
·         Will individual or organization will harm from any of alternatives.
Management accounting is both an art and science as it is more of applied science it depends on manager to manager for decision perspective as there is no standard rule of decision for particular dilemma. Principles of management accounting have to be applied by manager for decision making process it is an art and science both.

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Re: Management accounting is a decision making science.Comment

Post by zaid0407 on Fri Dec 30, 2016 9:51 pm

Management accounting is a tool which managers use for the provisions of accounting information in order to better inform  themselves before they decide matters within their organisations, which aids their management and performance of control functions.
Yes I do agree with the fact that management is an science as management plays an vital role in planning , controlling and decision  making in organization. Management accounting is science as well as an art as it as an understanding and capability of manager to apply principles of management accounting.
Management accounting  uses  various costing techniques in decision making such as :-
·         Standard costing
·         Marginal costing
·         Variance analysis
·         Cost volume profit analysis
Management accounting is a broader term than financial management and cost  accounting . It covers all risk and works by considering future vision of the company. Management accounting objectives and goals are as follows :-
·         Assess risk
·         Planning
·         Controlling
·         Measuring deviations
Hence , I conclude management accounting is an art and science both and it is a measure for decision making.

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Re: Management accounting is a decision making science.Comment

Post by kanishka mani on Fri Dec 30, 2016 10:03 pm

Management accounting is a decision-making science because it involves pure science and deep analysis of the information to get any result on which any decision can be taken.
If we go step by step we usually do these 4 things, which are:-
1) Cost Analysis
in this, we identify the type of cost like direct, indirect, fixed, variable or semi-variable. After the separation of the cost, we do the cost analysis of this.
2) Activity Based Analysis
After the cost analysis, we do the analysis based on the activity. for this, we use ABC analysis which is Activity Based Coasting.
3) Make or Buy Decision
In this, we also do the make or buy analysis. we make decisions whether to make any product or to buy any product which ever is profitable to us.
4) Utilizing the data
we utilize the data we got from all the analysis we got and finally take the decision which is more profitable and in favor of the company.

So, in the end, I would say that yes management accounting is decision-making science.

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Re: Management accounting is a decision making science.Comment

Post by kratika mishra on Fri Dec 30, 2016 10:32 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.
This is the conventional definition of management accounting, but if we a compare management account with the science then i will definitely say that it is the decision making Science. Yes I am saying this as science because, like science it also uses different tools and all the other things which gives the proof and base of making any decision for the firm and just like science this decision made with the help of management accounting tools always prove to be right, meanwhile I will also like to support the statement mentioned by ayush that "Right decision gives right direction for a right course of action." Hence at last I will just say that " Management accounting is a decision making Science."

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Re: Management accounting is a decision making science.Comment

Post by Sunali-pgfb1656 on Fri Dec 30, 2016 10:46 pm

I do not completely agree with the statement that management accounting is a decision making science.
Management accounting is both science and art which include in taking decision in organization.
Management as an Art, Science or Both:
Management accounting as a Science: Science may be described as a systematized body of knowledge based on proper findings and exact principles and is capable of verification.
Management accounting as an Art  :Art refers to the way of doing specific things; it indicates how an object can be achieved.
"Management is a mixture of an art an science - the present ratio is about 80% art and 20% science."
Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy".
Management accounting is an important part of the economic information system, with a key role in decision making, whether we talk about small and medium enterprises or large companies. management  accounting , oriented especially towards providing information to managers, being considered „an informational tool necessary to the management for taking decisions, to maximize profitability”
aims behind management accounting are as follows:
 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 Mohish on Fri Dec 30, 2016 10:56 pm

Managment accounting is one of thr major key factor which is required in taking decisions in a business. As business is executed in very dynamic environment and decisions should be made according to the situations and environment which is suitable for a business. Managment accounting creates a guideline for it and provides accurate measurements to a manager to take decisions.
There are two types of decision making:
•Planning decision making- In this kind of decision making few major points which a manager should look upon is Choosing a goal, predicting results under various alternative, making a decision.
For example-
Product management- Add a new product line, accept/reject a special oder.
Pricing- Swt selling price (profit or cadh flow)
Cost control- Add new equipment or change the recent equipment.
These all are the examples regarding planning decision making and it requires lots of efforts for a manager but becomes easy with management accounting.
•Control decision making- This type of decision making require Implementing of actions, Evaluating the performance of personnel and operations, check on the goal regularly and ensure that organization operates properly in the intended manner.

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