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Management Accounting
By : Gagan PareekHarish Nath
Chandan PriyadarshiKaran Sobti
Sandeepkumar ASabyasachi Behura
Anuraag Atal
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Management Accounting Is a tool which identifies the health of a company for its internal authorities through accounting functions.
What is Mgmt Acc ?
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Why Management Accounting
Planning
Directing and Motivatin
g
controlling
Imp of
Mgmt
Actg:
More Profit , More Savings more Customer Delight
Efficient control• Optimu
m labour efficiency
Efficient business operatio
ns
Efficient
planning
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Infosys Ltd
Pune
IHL EMEA
Bangalore
IHL APAC
Fin statement
Managerial Accounting
Significance of Fin Statement over Managerial Statement
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Difference…..
Sr. No Financial Accounting Managerial Accounting
1Reports to those outside the organization owners, lenders, tax authorities and regulators
Reports to those inside the organization for planning, directing and motivating, controlling and performance evaluation.
2Emphasis is on summaries offinancial consequences of past activities. Emphasis is on decisions affecting the future
3 Objectivity and verifiability of data are emphasized.Relevance of items relating to decision making is emphasized.
4 Precision of information is required Timeliness of information is required.
5Only summarized data for the entire organization is prepared. Timeliness of information is required.
6Must follow Generally Accepted Accounting Principles (GAAP).
Need not follow Generally Accepted Accounting Principles (GAAP).
7 Mandatory for external reports. Not mandatory.
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Basic objective is to make management more efficient Makes use of accounting and statistical methods to
represent the accounting and other information in the most suitable form.
Under Mgmt Actg the accounting information is further analyzed for better understanding and decision making.
Mgmt Actg helps management in envisaging and formulating realistic plans.
Mgmt Actg measures the execution of the plan so as to know whether or not the desired efficiency has been achieved.
Various reports – budgets, product costing data
Elements/Scope of Mgmt Actg
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Financial accounting
Cost Accounting
Revaluation
accounting
Control accounting
Statistical methods
Interim reporting
Internal audit
Taxation
Areas under Mgmt Actg?
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Based on Accounting Information
Lack of Knowledge
Intuitive decision
Not an alternative to Administration
Top heavy structure
Evolutionary state
Personal Bias
Limitations of Mgmt Actg
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Management Accounting and Decision Making
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SIX STEPS TO EFFICIENT DECISION MAKING
•create a constructive environment
•generate good alternatives
ge
e
•explore these alternatives
ge
e
•choose the best alternatives
ge
e
•check your decision
ge
e
•communicate decision, take action
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Management accounting not only plan formulation but also Decision Making and to measure how much desired efficiency has been achieved.
Statistical tools and techniques for effective decision making BUDGETING ACCOUNTING RATIOS FLOW OF FUNDS STATEMENT STANDARD COSTING AND VARIANCE ANALYSIS BREAK-EVEN ANALYSIS RESPONSIBILTY ACCOUNTING MANAGEMENT REPORTING STASTISCAL ANALYSIS
Decision Making Cont….
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Mgmt Actg and Decision Making
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Thank You