Management Accounting Principles

MANAGEMENT
ACCOUNTING PRINCIPLES

PRINCIPLES OF MANAGEMENT
ACCOUNTING
Influence – Communication helps in providing insight that has major influence.
Management Accounting commence and ends with conversations. It helps in improvising
decision through the communication of insightful information at the all stages of decision-
making (Drury 2013).
Relevance – Accounting and financial information is relevant. Management Accounting
assists in scanning the best available resources for relevant information to the decision-
making process and for the decision maker.

PRINCIPLES OF MANAGEMENT
ACCOUNTING
Value – Impact on Value must be analysed. Management Accounting plays a crucial role in
connecting the strategy of the firms to the business model while requires a complete
understanding of the wider macroeconomic environment.
Credibility – Stewardship plays a crucial role in building Trust. Scrutiny and Accountability
makes the process of decision-making more objective. Management Accounting improves
credibility and trust through balancing short-term commercial interest against long-run value
of the stakeholders (Hilton and Platt 2013).

ROLE OF MANAGEMENT ACCOUNTING
Stewardship Accounting – Designing the cost and financial accounting framework and preparing reports for routine financial and
operational decision-making is a key role of Management Accounting.
Long-term and Short-term Planning – Forecasting the future business and economic events to make future plans is another major role
of Management Accounting.
Development of Management Information System (MIS) – Management Accounting plays a crucial in developing MIS by providing
periodic reports along with other valuable information.
Maintaining Optimum Capital Structure – Management Accounting plays a pivotal role to raise funds along with their application.
Control – Management Accounting helps in preparing different types of reports for establishing overall control within the organization.
Decision-Making – Management Accounting plays an important role in both short-term and long-term decision-making process by
providing the necessary information (Taipaleenmäki and Ikäheimo 2013).