Management accounting is critically important for a growing business this is due to the fact that in order for a business to grow they would need to keep records of all their financing and management through accounting in order to track progress and growth within the business as well as figure out the ways in which their businesses are coming up short or are in need of improvement. The essential goal of management accounting is to use specific skills in order to make decisions towards the progress of the business accounting. Management accounting merges management with finance and accounting in order to maintain a perfect balance and ensure that all aspects are covered. However, they have different purposes and audiences, financial
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It is very essentially important that management accounting systems are invested into a growing business due to the fact that they can only benefit the business through calculations that are accumulated through the management accounting in terms of making short term decisions for the company, on the other hand financial accounting is important because it gives the company an ability to attract potential investors to the company which will end up benefitting the company itself.
The levels of costs differentiate according to the type of costs and classifications that may be involved. In terms of accounting cost refers to the value of the expenses for equipment, raw materials, labour, products etc. which is an amount that will be documented as an expenditure. Cost can be varied in terms of various classifications, ‘Classification is the process of arranging items into groups according to their degree of similarity and is defined as – The arrangement of items in logical groups having regard to their nature or the purpose to be fulfilled’ (B. K. Bhar 2008) classification of costs means that the cost may be varied in terms of other factors such as whether it is a direct or indirect cost, the variability, time and many others that may classify a cost. Direct and indirect costs are a specific type of classification of a cost, a direct cost is a cost which