Get premium membership and access questions with answers, video lessons as well as revision papers.

State and explain the characteristics/nature of management accounting.

Answers

1) Helps in decision making: It helps management in decision making. The information provided through management accounting is only for internal use of management and it not distributed to third parties.
2) Technique of Selective Nature: Management Accounting is a technique of selective nature. It takes into consideration only that data from the income statement and position state merit which is relevant and useful to the management. Only that information is communicated to the management which is helpful for taking decisions on various aspects of the business.
3) It is an optional technique: There are no statutory obligations regarding adoption of management accounting tool nor are there any obligations to furnish management accounting information. A firm may choose to adopt management accounting techniques totally depends upon its utility and desirability.
4) Provides Data and not the Decisions: The management accountant is not taking any decision but provides data which is helpful to the management in decision-making. It can inform but cannot prescribe. It is just like a map which guides the traveler where he will be if he travels in one direction or another. Much depends on the efficiency and wisdom of the management for utilizing the information provided by the management accountant.
5) Concerned with Future: Management accounting unlike the financial accounting deals with the forecast with the future. It helps in planning the future because decisions are always taken for the future course of action.
6) Analysis of Different Variables: Management accounting helps in analyzing the reasons as to why the profit or loss is more or less as compared to the past period. Moreover, it tries to analyze the effect of different variables on the profits and profitability of the concern.
7) Flexibility in presentation of information’s: Management accounting will not provide information in a prescribed proforma like that of financial accounting. It provides the information to the management in the form which may be more useful to the management in taking various decisions on the various aspects of the business.
8) Based on financial statements: It makes use of information and reports from financial accounting, cost accounting, tax accounting and other accounting disciplines to help management to forecast, plan and take better decisions.
9) Cause and effect relationship: Management Accounting emphasizes, specially, on cause and effect relationship.

Lellah answered the question on November 8, 2021 at 12:58

Next: Why is Teamwork Important at Workplace?
Previous: What are the objectives of management accounting?

View More Management Accounting Questions and Answers | Return to Questions Index

Learn High School English on YouTube

State and explain the characteristics/nature of management accounting.

Answers

Related Questions