Introduction

Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

In contrast to financial accountancy information, management accounting information is:

• forward-looking, instead of historical;
• model based with a degree of abstraction to support decision making generically, instead of case based;
• designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators;
• usually confidential and used by management, instead of publicly reported;

· Definition

· According to the Chartered Institute of Management of Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"

Scope of management accounting

· 1. Accounting Data Scope

This part of management accounting scope answers our following questions

Q:- Which tools are being used for analyzing of accounting data?
Q:- Which specific accounting data is used for analyzing financial position, income position and solvency position?
Q:- What are main types of financial statement analysis?
Q:- What are the limitations of financial statement analysis?

2. Interpretation Scope

After analysis through ratio analysis fund flow analysis, cash flow analysis or any other tool of management accounting, our next management accounting scope is interpretation scope. Analyzed data is also no tongue if you have no idea how to explain it? So, this is big scope for every wise man. Same analyzed financial statement's meaning may be different if interpretation is given by different account managers. For example, If we open the financial statement of twelve five years plan and we find that govt of India paid 1,10,000 Crores rupees for ending of poverty and you can find different detail of it. But if new account manager links it with no. of poor people, then we can see still 85% persons are poor. So, meaning of spending of Rs. 1,10,000 crores will become opposite. So, interpretation is important part of management accounting scope.

3. Decision Making Scope

"Who and how is the accounting information used for decision making?", is the part of scope of management accounting.

·

Difference between financial acc and management acc

Financial Accounting

• Reports to those outside the organization owners, lenders, tax authorities and regulators.

• Emphasis is on summaries of
  financial consequences of past activities.

• Objectivity and verifiability of data are emphasized.

• Precision of information is required.

• Only summarized data for the entire organization is prepared.

Managerial Accounting

• Reports to those inside the organization for planning, directing and motivating, controlling and performance evaluation.

• Emphasis is on decisions affecting the future.

• Relevance of items relating to decision making is emphasized.

• Timeliness of information is required.

• Detailed segment reports about departments, products, customers, and employees are prepared.

CONCLUSION

Management accounting helps businesses (and organizations) make good business decisions. Management accounting considers income and expenses, but it also considers management of time, people, and other resources. Business owners and managers use management accounting to help the business reach its goals, and serve the people who the business is designed to serve.

The key ideas are to help the business be more efficient, and more effective. Unlike "public accounting," management accounting is more for the benefit of "insiders." To put it simply, the insiders are the owners and managers of the business.

Submitted by:

Aditya (MB-03)A

Arpan(MB-130)C

Amit B