OBJECTIVES OF MANAGEMENT ACCOUNTING

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In the view of some scholars, the primary objective of management accounting is to enable management to maximize profits or minimize losses. This is done through the presentation of statements in such a way that management is able to take correct policy decisions. The following are the important objectives of management accounting.


Provides data: Management accounting serves as a vital source of data for management planning. The accounts and documents consist of a vast quantity of data about the past progress of the enterprise which is a must for making forecasts for the future

Modifies data: The accounting data required for managerial decisions is properly compiled and classified. For example, purchase figures for different months may be classified product-wise, supplier-wise, and territory-wise to know the total purchases made during each period.

Analyses and interprets data: Management accountants present the data in a simplified way i.e. technical data are presented in a non-technical way with the help of different tools and techniques like comparative statements, common-size statements, trend analysis, ratio analysis, fund flow statements, cash flow statement,s, etc. The management accountant gives his opinion about various alternative courses of action, so that, it can become easy for the management to take a decision.

Use of qualitative information: The field of management accounting is not restricted to the use of monetary data only. It collects and uses non-monetary information also. While preparing a production budget, the management accountant may not only use past figures but may also rely on the assessment of persons dealing with production, productivity reports, consumer, and other business document. The use of qualitative information is as useful as monetary information.

 Supplying information to management: The management accountant provides information to top-level management for decision-making and policy execution. The supply of adequate information at the proper time increases the efficiency of management.

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