Without the application of management accounting techniques no business can succeed in it’s operations and attain it’s set objectives. Moreover it’s decision making will not be guided as management accounting techniques provide adequate guide to management making at all levels.
Management accounting is the application of accounting knowledge, techniques and skills to the provision of information designed to assist all levels of management in planning and controlling the activities of a business enterprise.
The chartered institute of management accounting (CIMA) defines management accounting as ‘an integral part of management concerned with identifying , presenting and interpreting information used for formulating strategy , planning and controlling activities , decision taking , optimizing the used of resource , disclosure to shareholders and others external to the entity , disclosure to employees, safeguarding assets.
According to dictionary definition, management accounting is defined as ‘accounting designed for or adapted to the informational needs of various levels of management.
Conclusively, management accounting therefore is primarily concerned with data gathering, analyzing , processing , interpreting and communicating the resulting information for use within the organization so that management can more effectively plan, making decision and control operations.
While management accounting is concerned with the provision of management information, management accounting techniques is concerned with those practices in management accounting which management should adapt to facilitate management decision making.
According to T. Lucy , management accounting techniques , (1985 : 12) ‘ management accounting techniques is a method which is designed to suit the way goods are processed or manufactured or the way the service are produced’.
The techniques to be adopted by an organization depends on the purpose for which the organization that management accounting practice include those techniques as marginal costing , absorption costing , standard costing , actual costing ascertainment , variance accounting, budgetary control, differential costing , capital budget etc. included project evaluation which checks the viability and feasibility of projects to aid effective decision – making .
Government accounting, social or national accounting and accounting in the formal sector of the economy should be noted.
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