Scope of Management Accounting:
The scope of management accounting is very wide. The aim is to help management in its functions of planning, directing and controlling. The following are some of the areas of specialization of management accounting.
1. Financial Accounting:
Financial accounting is the general accounting which relates to the recording of business transactions in the books of prime entry, posting them in to respective ledger accounts, balancing them and preparing a trial balance. Hence management accounting can’t obtain full control and coordination of operations without a well designed financial accounting system.
2. Cost Accounting:
Cost accounting is a branch of accounting. It is the process and technique of ascertaining costs. Planning, decision-making and control are the basic managerial functions.
3. Inventory Control:
The management should determine different levels of stocks- Minimum Stock Level, Maximum Stock Level, Re-order Stock Level, for inventory control. The study of inventory control will be helpful for taking managerial decisions.
4. Interpretation of Data:
Analysis and interpretation of financial statements are important parts of management accounting. After analyzing, the interpretation is made and the reports drawn from these analyses are presented to the management in a simple language.
5. Tax Accounting:
Income statements are prepared and tax liabilities are calculated. The management is informed about tax burden from central Government, state Government and Local Authorities.
The scope of management accounting is very wide. The aim is to help management in its functions of planning, directing and controlling. The following are some of the areas of specialization of management accounting.
1. Financial Accounting:
Financial accounting is the general accounting which relates to the recording of business transactions in the books of prime entry, posting them in to respective ledger accounts, balancing them and preparing a trial balance. Hence management accounting can’t obtain full control and coordination of operations without a well designed financial accounting system.
2. Cost Accounting:
Cost accounting is a branch of accounting. It is the process and technique of ascertaining costs. Planning, decision-making and control are the basic managerial functions.
3. Inventory Control:
The management should determine different levels of stocks- Minimum Stock Level, Maximum Stock Level, Re-order Stock Level, for inventory control. The study of inventory control will be helpful for taking managerial decisions.
4. Interpretation of Data:
Analysis and interpretation of financial statements are important parts of management accounting. After analyzing, the interpretation is made and the reports drawn from these analyses are presented to the management in a simple language.
5. Tax Accounting:
Income statements are prepared and tax liabilities are calculated. The management is informed about tax burden from central Government, state Government and Local Authorities.
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