Management Accounting

By : Gagan PareekHarish Nath

Chandan PriyadarshiKaran Sobti

Sandeepkumar ASabyasachi Behura

Anuraag Atal

Management Accounting Is a tool which identifies the health of a company for its internal authorities through accounting functions.

What is Mgmt Acc ?

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

Infosys Ltd

Pune

IHL EMEA

Bangalore

IHL APAC

Fin statement

Managerial Accounting

Significance of Fin Statement over Managerial Statement

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.

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

Financial accounting

Cost Accounting

Revaluation

accounting

Control accounting

Statistical methods

Interim reporting

Internal audit

Taxation

Areas under Mgmt Actg?

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

Management Accounting and Decision Making

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

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….

Mgmt Actg and Decision Making

Thank You