Managerial Accounting Role and Relevance in Modern Entities Report

This report delves into the critical role and enduring relevance of managerial accounting in contemporary business environments, specifically addressing the argument presented by Kaplan and Johnson regarding its perceived decline. The report emphasizes the crucial function of managerial accounting in providing timely and relevant information for internal decision-making, performance measurement, and strategic planning. It explores the application of managerial accounting tools in forecasting, variance analysis, cash flow management, and investment decisions. Furthermore, the report underscores the importance of managerial accounting in achieving organizational sustainability by enabling effective resource allocation, cost control, and compliance with regulations. The report concludes by disputing Kaplan and Johnson's assertion, arguing that managerial accounting remains indispensable for businesses aiming to thrive in a competitive and sustainable manner.

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MANAGERIAL ACCOUNTING

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Table of Contents
Introduction......................................................................................................................................3
Management accounting and its importance...................................................................................3
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Management accounting plays an important role in the business and it is required to be evaluated
in a proper manner. The report will be covering the role which is played by the same in the
business and the reason for which management accounting is considered as relevant.
Sustainability is required to be maintained in the business and in that management accountant is
essential to be followed. All of this will be discussed in the report to make the argument for the
statement provided by Kaplan and Johnson.
Management accounting and its importance
Management accounting is the process which is followed in the business to prepare all the
reports and accounts in a timely manner. All of the required information and facts are presented
in this which helps in making the required decisions for the company whether they are long term
or short term. With the help of this all the information that is used is analyzed, measured,
communicated and interpreted in an appropriate manner. The organizational goals are fulfilled in
appropriate manner with the help of this technique (Fullerton, Kennedy and Widener, 2013). The
management accounting coves the information which will be provided to the internal parties
only. According to Kaplan management accounting has lost its use but the statement is not fully
correct. It is still used in the businesses and is helpful in various processes which are undertaken.
By the help of the data which is collected under this, it is possible to forecast the future of the
company and that will help in taking the effective decisions for the coming period. There are
various situations which arise in the business and in that decisions are required to be made in the
best possible manner (Contrafatto and Burns, 2013). The systems and information which is
involved in the process are used and proper evaluation is made. The alternatives which are
available are compared and then the best among all which will be provided with the required
results will be taken into account.
In business, it is very important that the performance is measured in a timely manner. This will
be done with the help of the variance analysis and for that all the data will be required. All of the
required facts will be collected with the help of the management accounting tools and then the
budgeted and actual results will be compared to measure the performance of the business (Juras,

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2014). The variances will be identified together with the reason for the same and then company
will be able to adopt such practices by which the variances can be eliminated and performance
can be improved.
The high amounts of funds are required to carry the operations of the business and they will be
made available by identifying the needs in advance. With the use of management accounting
cash flows will be analyzed and requirement will be forecasted in advance. All the available
options will them be evaluated and compared and the one which will be provided with the least
cost will be selected (Moorthy et al., 2012). This will eliminate the issues which are faced in
relation to cash flows and business will be carried in unhindered manner. This will help in
gaining more advantages as more amounts will be earned with the high investments which are
made.
There are various investments which are required to be made and for that proper analyzation are
required. All of the cash flows which will be taking place in them will be evaluated and with
that, the return which will be earned on the same will be identified. If there will be more
investments then the one which will be providing the company with more profits will be taken
into consideration.
The long term goals in the business will be attained with the help of various processes that are
undertaken. They will be designed by the help of the tools which are available under
management accounting (Hasniza Haron, Kamal Abdul Rahman, and Smith, 2013). The pricing
of the products in the business is an important decision and by that only the profitability of the
company will be decided. The price of the product will be set by taking into account the
information collected and then determining such price which will be providing the company with
the benefits and also will be affordable for the consumers. The cost which is incurred is required
to be controlled and that will be done with the help of preparation of the budgets. In that limit for
all the expenses will be set and that will be required to be followed by all in appropriate manner.
The expenses will be therefore controlled and this will help in increasing the profits of the
company which will be utilized for the various other investments that will yield additional
income to business.
The reporting in the business is required to be made in such manner that it complies with all the

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regulations which are specified (Cooper, Ezzamel and Qu, 2017). This will also be done by
management accounting as all the aspects which need to be considered will be taken care off.
The reports will be prepared in such manner that there will be the best understanding which will
be provided and all the users will have the required data which will be used for various purposes
by them. The information which is available under management accounting is for the internal use
only and that makes it highly confidential.
In order to maintain the position in the competitive market it is highly required that the
management accounting shall be followed as the benefit of the competition will be attained
(Ahmad and Mohamed Zabri, 2015). There will be an avoidance of the risk and which is
involved and the best results possible in the competitive market will be attained.
In the business, there are various issues which are faced and it is required that they shall be
resolved in an effective manner so that business can be maintained in long run. The sustainability
of the business is required to be managed and that will be possible by adopting various available
management accounting practices (Breuer, Frumusanu and Manciu, 2013). There are various
functions which are performed in the business and integration among them is performed with the
help of it. The information which is required for the planning is made available to the managers
by this and that will help in developing the best plans by which long term goals of the business
can be attained. The system will be developed in such manner that no adverse impact is faced
and all the requirements are met in an appropriate manner. The decision making is done by
following all the available data and that will provide the business with the best results. Various
techniques which are available under this approach are of great help to the business (AlMaryani
and Sadik, 2012). There is the measurement of the performance which will help in maintaining
the position and making the improvement in the same. The budgetary control is made applicable
and by that control is established which eliminates the wastage of resources and that ensures that
sustainability in terms of resources and other aspects will be made possible. All the decisions are
made by taking into account the management accounting and its approaches so that business
objectives are attained and the success is ensured (Wanderley and Cullen, 2013). The statement
which is presented by Kaplan that management accounting has lost its relevant is not appropriate
(Kaplan and Johnson, 1987). This can be said as management accounting has still the same
importance and although the accounting is not compulsory but then also is taken into account by

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all the businesses. It is highly relevant and provides the company with the advantages which are
not possible by any other approach. It is important and makes business to perform in appropriate
manner and also ensures that sustainability is maintained. By using this business will be
continuing in long run and that will be beneficial for the business as well as other parties
involved in the same.
Conclusion
The report that is presented above provides the information in relation to management
accounting. The importance of accounting for the business has been identified and with that role
which is played by it in the business has been taken into account. The various areas in which this
can be used and will be providing the business with the benefits have been identified and taken
into account. It has been ascertained that business will be able to operate in an effective manner
and all the decisions will be made by taking the required information into consideration. The best
approaches will be used and there will be sustainability which is possible with the use of
management accounting. The business will be run on the long term basis and that will be
relevant in all aspects.

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References
Ahmad, K. and Mohamed Zabri, S. (2015) Factors explaining the use of management accounting
practices in Malaysian medium-sized firms. Journal of Small Business and Enterprise
Development, 22(4), pp.762-781.
AlMaryani, M.A.H. and Sadik, H.H. (2012) Strategic management accounting techniques in
Romanian companies: Some survey evidence. Procedia Economics and Finance, 3, pp.387-396.
Breuer, A., Frumusanu, M.L. and Manciu, A. (2013) The role of management accounting in the
decision-making process: Case study Caras Severin county. Annales Universitatis Apulensis:
Series Oeconomica, 15(2), p.355.
Contrafatto, M. and Burns, J. (2013) Social and environmental accounting, organizational
change, and management accounting: A processual view. Management Accounting
Research, 24(4), pp.349-365.
Cooper, D.J., Ezzamel, M. and Qu, S.Q. (2017) Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K. (2013) Management accounting and control
practices in a lean manufacturing environment. Accounting, Organizations and Society, 38(1),
pp.50-71.
Hasniza Haron, N., Kamal Abdul Rahman, I. and Smith, M. (2013) Management accounting
practices and the turnaround process. Asian Review of Accounting, 21(2), pp.100-112.
Juras, A. (2014) Strategic Management Accounting-What Is the Current State of the
Concept?. Economy Transdisciplinarity Cognition, 17(2), p.76.
Kaplan, R.S. and Johnson, H.T. (1987). Relevance lost: The rise and fall of management
accounting, Boston, MA: Harvard Business School Press.
Moorthy, M.K., Voon, O.O., Samsuri, C.A.S.B., Gopalan, M. and Yew, K.T. (2012) Application
of information technology in management accounting decision making. International Journal of

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Academic Research in Business and Social Sciences, 2(3), p.1.
Wanderley, C. and Cullen, J. (2013) Management accounting change: A review. Revista Base
(Administração e Contabilidade) da UNISINOS, 10(4), pp.294-307.