Management Accounting Techniques and Tools for Business Decision Making

This paper discusses the techniques and tools of management accounting that help organizations in handling accounting tasks and driving business performance. It covers financial planning, cost accounting, management information system, budgetary control, and standard costing.

Running head: MANAGEMENT ACCOUNTING
Management accounting
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MANAGEMENT ACCOUNTING
Introduction:
The paper elucidates the techniques of management accounting and how such
techniques help the organization in handling the tasks of accounting and driving the
performance of business. Managerial accounting requires the managers to take corrective
measures like proper accounting methods so as to make decisions with the organizations.
Discussion:
Management account in an organization is actually a profession which involves the
proper management of resources, decision making, resource allocation and providing an
expert advice in the financial report. They are managers of accountancy in the organization
where they are make use several strategic plans and method to ensure the smooth functioning
of the plan within the organization. Considering the needs and demands of the organization
they keep a track record of all the events that are happening in and around the organization.
Financial planning forms an important part of the management accounting as it has
the objective of maximizing the profits of the business. It helps in facilitating decision
making, improving performance and achieving goals and objectives of the business (Ax and
Greve 2017). All the types of business are able to plan their finances and its associated
operation with the help of this technique.
Talking about cost accounting where there is a need to record, summarize, analyze,
allocate and using the cost associated with any particular process only after developing and
analyzing several methods to control or to lower such costs. Their main job to emphasize on
advising the management on using the proper business practices depending upon the
efficiency of the cost. Also there are no comparison issues of the decision making of one
organization to the other organization; however relevant information’s are only used for any
organization. Standard costing is about the cost accounting is used in any kind of business

MANAGEMENT ACCOUNTING
whether it is manufacturing or trading business the managers take into account the cost
accounting to keep a track of all the cost related activities in the organization (Malmi 2016).
The next technique that has been discussed is the Management information system.
For the effective functioning of the business, it is required to have free flow of
communication between and within the deportments. At present, many organizations are
relying on the information system for managing the flow of information between the
suppliers and accounting department. Using this system, the information provided by the
suppliers is recorded by the accountants and is processed with the help of computer system
and thereby is advantageous to the management accountants. Information can be preserved in
a mechanical manner and whenever required are communicated to the management.
Therefore, the economic information can be supplied to the management in an efficient
manner using the information system.
Taking the budgetary control measures into consideration, it inquires the managers to
make use of the budgets to monitor and control costs and operations in a given period of time.
Budgetary control means goals with budgets. It is very likely to the yearly performance of the
students in a school. The budget process means the same thing. At first a budget needs to be
created which involves creating a set of financial goals which the company needs to achieve.
Secondly the budget created needs to be compared and analyzed with the actual performance
with the budgeted goals. Finally after the comparisons are all done the managers try to use
the most effective measures to achieve the budgeted goals of the company (Otley 2016).
After the yearly goals are all achieved, the final most steps are to make plans and strategies
for the coming year and setting goals for the same. Again they make comparisons with
previous year’s budgeted performance with the coming year and make sure that the targets
are achieved more effectively after having set the budgeted goals.

MANAGEMENT ACCOUNTING
Standard costing on other hand is an accounting system which is used by several
manufacturers of the company for identifying the variances or plotting the distinction in
between the actual cost of the produced goods and commodities and the cost that should have
been produced between the actual goods produced in a company. The difference in between
the standard cost and the budgeted costs is recognized by the organization for some reasons
identified (Hopper and Bui 2016). If a company makes use of labour cost, capital materials
and many other inputs more than it should have used then the company will not meet its
projected income for the same.
Conclusion:
From the analysis of different techniques and tools of the management accounting that
are used by business, it can be inferred that each of them contributes to facilitating the prices
of decision making. Depending upon the circumstances and suitability of the process of
accounting implementation of appropriate techniques of management accounting is done by
the organization.

MANAGEMENT ACCOUNTING
References list:
Ax, C. and Greve, J., 2017. Adoption of management accounting innovations: Organizational
culture compatibility and perceived outcomes. Management Accounting Research, 34, pp.59-
74.
Hopper, T. and Bui, B., 2016. Has management accounting research been
critical?. Management Accounting Research, 31, pp.10-30.
Malmi, T., 2016. Managerialist studies in management accounting: 1990–2014. Management
Accounting Research, 31, pp.31-44.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–
2014. Management accounting research, 31, pp.45-62.