IMPORTANCE OF MANAGEMENT ACCOUNTING

In the Present complex industrial world, management accounting has become an integral part of management. Management accountant guides and advises management at every step. Management accounting not only increases the efficiency of the management but also increases the efficiency of the employees. The main importance of management accounting is given below:

Determine of aim: Management accounting on the basis of the information available determines its goal and tries to find out the route through which it can reach the goal.

Better services to customers: The cost control device is management accounting that enables the reduction in the prices of the Product. All employees in the concern are made cost conscious. The quality of the product becomes well because quality standards ate pre-determined. The Customers are supplied goods and goods quality at a reasonable price.

Easy to take judgment: Before taking any plan or determining policy. There are several plans or policies before the management on the basis of the study decides which plan and policy was to be adopted so that it may be more useful and helpful.

 Measurements of performance: The techniques of budgetary control standard costing enable the measurement of performance In standard costing, standards are determined first, and then the actual cost of compared with the standard cost. It enables the management to find out deviations between standard cost and actual cost. The performance will be good if the actual cost does not exceed the standard cost. A budgetary control system to helps in measuring the efficiency of all employees.

Increases efficiency of the business: Management accounting increases the efficiency of the business concern. The targets of different departments of the enterprise are determined in advance and the achievement of these goals is taken as a tool for measuring their efficiency.

Provides effective management control: The Tools and techniques of management accounting are helpful to the management in planning controlling and coordinating activities of the business, the getting standards and assessing actual performance regularly enables the management to have 'management by exception'. Everybody assesses his own work and immediate actions are taken as a tool for measuring their efficiency.

Maximum profits can be obtained: in this process, every possible effort is made to control unnecessary expenses. The incapability or inefficiency is removed. New systems or techniques are found to achieve the goal, so that there may be maximum profits out of the capital invested in the Business.

Safety and security from trade cycle: The Information received from the management accounting gives more or throws enough light over the past trade cycle. The management tries to ascertain the Causes of the trade cycle and its effect. Thus, management accounting tries to safeguard the organization from the effect of the trade cycle.