Objectives Of Management Accounting
Concentrates all accounting functions on the company administration with accounting analysis, budgetary control, costing. Also, recognised as the term that best describes the different accounting methods, systems and techniques to support management to maximise profit and minimise losses. Yet, makes use of management principles to plan, develop, execute and control the business strategy (Prasad & Sinha, 1990).
Conceptually, management …show more content…
Hence, management accounting produces internal reports design for the necessity of managers inside the organisation, the financial accounting produces external financial statements for public use and presents to shareholders, creditors and governmental agencies, focusing its action on historical aspects generating accurate and timely data observing the organisation as group. When management accounting not only analyses the company as a whole but also divides the organisation into departments (Shim & Siegel, 1999).
Although management accounting and financial accounting have different objectives inside an organisation these have a close interaction. As mentioned earlier the management accounting makes use of financial information such as the inflow of stock and company out flow to customers to create cash flows and observe the company profit. This measurement supports management on its decisions making either in short term as long-term. The decisions made by management accounting have strong impact on the value of the company (Weetman, …show more content…
Yet budgets are used to provide structure to organisations by giving guidance on how to reach profit at year end, through planning, identify objectives and necessary precedents to accomplish the set plan (Weygandt, et al., 2010).
The objectives of budgeting are different between departments of an organisation, either internal and external.
The executives board of an organisation use the overall budget indicators as they are more concerned with the consolidation of budgets and to achieve that they look at variants reports and key performance indicators (KPI) to determine how the departments and subsidiaries are performing. Budgets are also use to predict cash flows and demonstrate how those are being met and if there is any need of adjustments at the end of the budget. Becoming especially useful for companies operating in retail industry that are exposed to seasonal sales or irregular sales patterns. Their main goal is to assure that revenue for the consolidate company is growing comparably to its competitors. While the manager of a certain department is more concerned to achieve objectives, for example the production manager is focused to follow the budgeted amount of production (Rasmussen, et al., 2003). Budget also used to allocate resources or funds according