Management Accounting: Evolution, Objectives, Importance and Growth

This report provides a comprehensive overview of management accounting, tracing its evolution from historical practices to its current role in modern organizations. It examines the objectives and functions of accounting and finance, including financial administration, budgeting, and value creation, highlighting their importance in legal compliance, performance analysis, and communication with stakeholders. The report also discusses the future of accounting, emphasizing the impact of digitalization, outsourcing, and emerging technologies like machine learning and robotic process automation. It concludes that adapting to these changes is crucial for businesses to remain competitive and meet the demands of the evolving market, with Desklib offering additional resources for further study.

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Past evolution of accounting and finance...............................................................................2
Future growth of accounting and finance...............................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
1

INTRODUCTION
Everyone is very well understanding about the accounting and finance it is one of the main
part of the economy, which has become universally spread in our daily lives today. It’s become
impossible to visualise modern organization and economy without this element. Accounting is
thoroughly knowing system that consider the movement of various truths of economic life,
doesn't matter how separate they are and guide them into a same objective system (Abernethy
and Wallis, 2019.). In this case study it mainly discusses about the evolution of accounting and
finance how it develops in past and also become useful in today's time also. After that it's helps
to understand the objectives and nature of accounting and finance and its importance in today
scenario. At last it also talks about development and growth of accounting in near future.
MAIN BODY
Past evolution of accounting and finance.
Accounting took a various kinds of forms, based on the growth stage of manufacturing relations,
efficient teams, legislation, tradition, etc. with the growth of equipment’s of labour, the part
of economic connections, the detail model returning them also became high experienced, the
techniques and the part of detail procedure were also better (Allen and et.al., 2020.).
Procedure of Accounting Growth and development
Time phase Significance
Up to 6000 years BC. The disclosure of accounting
From 4000 BC. Until 500 BC. The appearance level of development
500 BC - 1300 The cost of growth and expansion
1300-1850 Diagram level of growth and development
1850-1900 Edmond Derange (1797) Conceptual and experimental stage of
development
1900-1950 Research- based level of development
2

1950 and until our time The recent level of growth and development
Accounting is also known as science because it has its own concept, the legislation of double-
entry of economic transactions, arise at the last of the middle ages. The first considering the
double-entry bookkeeping is Italy, which is related with L. Aioli.
During that time, accounting was clarifying in legal and economic sense. For the very first time
the legal clarification of accounting is given by Edmond Degrange (1797), who meet the
economic activity and claimed that minimum two accounts are important for each activity: debit
is for the receiver and the credit is for the giver. The elements of the legal way were measured by
Francesco Villa (1864), it moved from self-actualisation rather than the account determination
with an individual, they put the accounts for individuals and clarify all accounts as open ones for
custodian agents.
Together with the legal clarification of accounting, economic clarification of accounting
emergence. Giuseppe Forney (1790) it talk about the subject of accounting act for not by the
physical and legal individuals, subjects of rights and duty, but by objects, things and morals.
All values are calculated in the terms of money and this convert them into a relative and
qualitatively same property(Daugaard, 2020.).
Objectives and purpose of accounting and finance
 Accounting of finance: In this point it discuss about the main role and function of this
step basically this help to keep the and maintain the transaction of accounts and utilize
the double-entry bookkeeping function and also make the financial statement of the firm
for gathering the various kind of regulatory desires for statutory reporting, the taxation
department and stock exchange. The person is answerable for this role into the small to
large companies is the accountant, who will regularly report to the director of finance
department.
 Financial administration: In the small and large firms company hire a system accountant.
It will analyse the financial results of the company and explain present administration. It
only answerable for the creation and maintenance of financial statements and to provide
affiliation between the finance and technology system authorities.
3

 Budgeting: The role and function of budgeting into the small and large organization is it
prepare budget to manage the activities into the organization and helps in achieving the
budgetary goals into the company. It prepared by the budget accountant on a monthly
basis(Tram-Nguyen, Tuan-Le and Van, 2021.).
 Accounting management: This concept of accounting deals with the identify and control
of financial details to help the daily activities of the organization. This small and large
company appoint a management accountant and they are answerable to perform the
operation of the business and it daily report to the financial director
 Value creation: if company wants to create value in the market then they have to perform
task efficiently into the organization and create better business plan this helps to create
goodwill of the firm. There are some factors which assist the company to create it's value,
Acquiring the better possible borrowing rates, control expenses, decrease the financial risks,
improve the collection of debt, create good management of cash, etc.
Importance of accounting and finance
 Escape legal issues: Maintain a correct financial records assist to follow main business
laws. Manager necessary to know what type expenses to subtract, how much taxes
company have to pay and when to pay those taxes(Stewart, 2018).
 Analysing the results: This importance of accounting and finance helps the company to
analyse the performance of the current situation. Basically company analyse the current
business position with its historical records. These historical records help the company to
learn from its past mistake and help to face same difficulties in current situation.
 Outer communication: This step is important concept of accounting and finance because
it helps the business to deal with external parties in respect of financial information. It's
mainly important while company getting a loan from the bank or attracting stron
investors towards their company. So, they can easily generate funds with the help of it
good financial information. Better financial statement create easiness from the company
to give financial report to the external stakeholder.
 Inner communication: Financial statement can also assist company proprietor to
communicate details to the internal stakeholder of the company. This detail is important
4

to the staff members who are showing their interest in sharing profit and inventory based
compensation. This statement also permit to the proprietor to tell about the strength and
weakness of their company with their staff members(Zhang, Qin and Wei, 2019.).
 Develop the plan: If company wants to stable in long run then they have to make good
strategy for achieving the accounting and finance related activity. Basically if company
before starting the task prepare a better plan structure of it then it will help the
organization to achieve it's objectives.
Future growth of accounting and finance
To stable the condition of the business in today's highly competitive market is very difficult. If
company want to survive then they need to increase their productivity and if company objective
for expansion, launching new product or want to create a global business then they have to work
harder and need to increase their efficiency in the firm.
The digitalization not only come with the new technologies it provide new way to do business
but it also create new risks and challenges. But in spite of disturbance, it has needed to grab
fluctuations and digital transformation to stay up with the develop business environment and
meet the demands of market.
The finance future merge the emotional intelligence of knowledgeable financial professionals
with the correct technologies(Pathrose and Selvaraju, 2021.). Now it's discuss about some
future change in finance and accounting:
 Future of accounting and finance is outsourcing: Sometimes, advanced technology are
costly and not all organization , basically from start-ups have the money to manage them.
To solve the problem of expensive technology outsourcing is the best technique that
permit the company to take the advantage of from advanced finance and accounting
software tools. The future of finance and accounting use outsourcing method because it is
better that assist to decrease the operating expense while earning to hold up the top
finance experienced, along with the talent of experienced accounting professionals.
 Change the structure of finance world through technology: Learning through machines,
robotic procedure automation, modern data analytics, artificial intelligence and cloud-
based infrastructure these are some of the technologies that are helps in changing the
5

infrastructure of accounting and finance. Holding these technologies means high than just
accepting modern techniques that will keep it admissible, but understanding the future of
accounting and finance.
CONCLUSION
As it is concluded from the above report that the evolution and development of accounting and
finance in very efficiently grow from the past historical years till the current situation. Because it
helps in many sectors and it’s very important part for every organization with the help of
accounting company manage its fund and profitable situations in the firm. So, it’s assist the
business to know the company current position through the financial statements and it's prepared
by the accountant who report on daily basis to it finance director of the organization. In this
report it also discusses about the importance, Role and purpose of accounting and finance and
after that it talk about the future growth of accounting and finance and it concluded that the basic
growth of accounting and finance is mainly through outsourcing and changes in technology in
near future.
6

REFERENCES
Books and Journals
Abernethy, M.A. and Wallis, M.S., 2019. Critique on the “manager effects” research and
implications for management accounting research. Journal of Management Accounting
Research. 31(1). pp.3-40.
Allen, D.W., et.al., 2020. Blockchain and the evolution of institutional technologies:
Implications for innovation policy. Research Policy. 49(1). p.103865.
Daugaard, D., 2020. Emerging new themes in environmental, social and governance investing: a
systematic literature review. Accounting & Finance. 60(2). pp.1501-1530.
Stewart, A., 2018. Can family business loosen the grips of accounting, economics, and
finance?. Journal of Family Business Strategy. 9(3). pp.153-166.
Tram-Nguyen, T.H., Tuan-Le, A. and Van, N.V., 2021. Factors affecting the implementation of
management accounting techniques in medium-sized enterprises of Vietnam. Problems
and Perspectives in Management. 19(3). p.440.
Zhang, L., Qin, Q. and Wei, Y.M., 2019. China's distributed energy policies: evolution,
instruments and recommendation. Energy Policy. 125. pp.55-64.
Pathrose, E.P. and Selvaraju, M., 2021. THE REAL EFFECT AND CONSEQUENCE OF
REGULATION REFORM IN CORPORATE FINANCE AND BANKING. SPAST
Abstracts. 1(01).
7