Managerial Accounting is the process of tracking, recording and examining costs associated with the products or actions of an association. Managerial accounting does not track normally acknowledged accounting principles. In managerial accounting, costs are considered in units of currency by convention (icfai 2007[online]). Managerial accounting can also be defined as a kind of cost accounting that covert the supply chain into economic values. Supply chain is nothing but the sequence of events in the manufacture process which results in a product. Managers mostly use cost accounting principles to maintain alternative making to reduce company’s expenses and progress its productivity.

 

MODE OF APPROACHES IN MANAGERIAL ACCOUNTING:

 

•           Standard managerial accounting

•           Activity-based Managerial Costing

•           Throughout managerial accounting

•           Marginal Costing in managerial accounting

 

PRINCIPLES OF MANAGERIAL ACCOUNTING:

 

Strategic - Preceding the role of the organization accountant as a strategic co-worker in the association.

Performance management - Improves business by managing and evaluating and thereby giving the performance of the company.

Risk Management - Concentrates on frameworks and practices for recognizing, managing and reporting risks to the achievement of the objectives of the organization. (Hendrik 2005)

 

BENEFITS OF MANAGERIAL ACCOUNTING:

 

• Determining performance

• Dropping or managing costs

• Examining the prices for products and services

• Choosing to approve, change or suspend a plan or action

 

Information on the expenses programs and actions may be used as a source to estimate prospect costs in organizing and evaluating budget requisition is another benefit of managerial accounting. If the financial statements are approved and performed then cost related information serves as a practical feedback on presentation for managerial accounting (Wikipedia 2007[online]). Also, cost will be compared to identify or benefits based on assumption for value added and non-value added actions. Dependable information for the programs on cost and activities is critical for the efficient management of a business article’s operations.

 

IMPORTANCE OF MANAGERIAL ACCOUNTING:

 

The main aim of managerial accounting is to improve the efficiency and quality of operations by providing program owners and all others with suitable and applicable cost based performance information to permit for nonstop improvement in distributing the output to outcome the stockholders (allbusiness2007 [online]). Managerial accounting has been developed and used with all from the beginning times to help all the directors to understand the costs of running a project (Garrison Brewer nd). Modern managerial accounting is created during the industrial revolution during the difficulties of running a large scale business which show the way to the development of scheme for recording and checking costs to help business proprietors and managers to finalize and make conclusions.

 

So, to conclude, for any business unit starting from the smallest business activity to the largest multinational business to be succeeded requires the use of managerial accounting concept and practices (Hendrik 2005). This accounting provides data to owners for preparation and scheming of rating products and services for customers too. The main focus of managerial accounting is to help the managers for making better decisions. Because of all these reasons, businesses and organizations hire on managerial accountants and thereby, they are becoming integral persons of decision making teams instead of just data providers.

 

 

References:

 

Managerial Accounting by Hendrik

Managerial Accounting by Ray H Garrison and Peter C. Brewer

Accounting practices by Robert

www.allbusiness.com [online source]

www.wikipedia.org/wiki/Accounting [online source]

icmr.icfai.org/casestudies [online source]