May 7, 2019

Managerial Accounting or Management Accounting - Role in Business and Industrial Organizations

Management decision making requires accounting information.

The management process is a series of activities in a cycle of planning and control.

Planning involves decision making - the purposeful choice from among a set of alternative courses of action designed to achieve some objective. Control also involves decision to plan a control action. The difference between planning and control decisions is planning is more open ended with less constraints. Control is a more constrained process in which the main objective is achievement of plans and the main input is actual results in a period and comparison of them with the planned results.

Management accounting formalizes plans of the organization as budgets. It also formalizes the control process by preparing as performance reports.

Management accounting information is also used in organization of material resources. Which technology to us and the individual pieces of equipment are determined on the basis of accounting information provided by management accountants. The activity of directing involves resource allocation. Resource allocation decisions are also taken using management accounting information.

Updated on 8 May 2019, 8 December 2011

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