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CHAPTER I – AN OVERVIEW OF THE
CHAPTER
 1. DEFINITIONS
 2.INTERNAL MGT. DECISION AREAS
 3.FUNCTIONS OF MGT. ACCOUNTING
 4.SCOPE OF MGT. ACCOUNTING
 5.LIMITATIONS OF MGT. ACCOUNTING
 6.DISTINCTION BETWEEN
MGT.ACCOUNTING AND FINANCIAL
ACCOUNTING

CHAPTER 1- AN OVERVIEW
 7.MGT. ACCOUNTING IN SERVICE AND
NON-PROFIT ORGNS.
 8.FEATURES OF PROFIT SEEKING AND
NON-PROFIT ORGNS.
 9.WATCHWORD OF INSTALLATION OF AN
ACCOUNTING SYSTEM
 10.CAREER OPPORTUNITIES IN MGT.
ACCOUNTING

MANAGEMENT ACCOUNTING
THE PROCESS OF
IDENTIFYING
MEASURING,ACCUMULATING,
ANALYSING,PREPARING,INTE
RPRETING,AND
COMMUNICATING
INFORMATION THAT HELPS
MANAGERS FULFILL
ORGANISATIONAL
OBJECTIVES

MANAGEMENT ACCOUNTING-ICAEW
 “ ANY FORM OF ACCOUNTING WHICH
ENABLES A BUSINESS TO BE
CONDUCTED MORE EFFICIENTLY CAN
BE REGARDED AS MANAGEMENT
ACCOUNTING”

MGT.ACCOUNTING- ROBERT
ANTHONY
 “ MGT.ACCOUNTING IS CONCERNED
WITH ACCOUNTING INFORMATION
WHICH IS USEFUL TO MANAGEMENT”

MGT.ACCOUNTING- BATTY
 “ MGT. ACCOUNTING IS THE TERM USED
TO DESCRIBE THE ACCOUNTING
METHODS,SYSTEMS AND TECHNIQUES
WHICH COUPLED WITH SPECIAL
KNOWLEDGE AND ABILITY , ASSIST MGT.
IN ITS TASK OF MAXIMISING PROFITS OR
MINIMISING LOSSES”.

INTERNAL MGT.DECISION AREAS
 1. FINANCIAL DECISIONS
 2.RESOURCE ALLOCATION DECISIONS
 3.PRODUCTION DECISIONS
 4.MARKETING DECISIONS

FUNCTIONS OF MGT. ACCOUNTING
 1.MODIFICATION OF DATA
 2.ANALYSIS AND INTERPRETATION OF DATA
 3.FACILITATING MGT.CONTROL
 4.FORMULATION OF BUSINESS BUDGETS
 5.USE OF QUALITATIVE INFORMATION
 6.SATISFACTION OF THE INFORMATION NEEDS
OF LEVELS OF MANAGEMENT

SCOPE OF MGT.ACCOUNTING
 1. GENERAL ACCOUNTING
 2. COST ACCOUNTING
 3.BUDGETING AND FORECASTING
 4. COST CONTROL PROCEDURES
 5. COST AND STATISTICS
 6.TAXATION
 7.METHODS AND PROCEDURES
 8.AUDIT

LIMITATIONS OF MGT. ACCOUNTING
 1. LACK OF KNOWLEDGE &
UNDERSTANDING
 2.PERSISTENCE OF INTUITIVE DECISION
MAKING
 3.WIDE SCOPE
 4.EVOLUTIONARY STAGE
 5.PSYCHOLOGICAL RESISTANCE

DISTINCTION BETWEEN MANAGEMENT ACCOUNTING AND
FINANCIAL ACCOUNTING
 1.PRIMARY USERS
 MA- ORGANISATION MANAGERS AT
VARIOUS LEVELS
 F.A- OUTSIDE PARTIES SUCH AS
INVESTORS,AND GOVT.AGENCIES BUT
ALSO ORGN. MANAGERS

MGT & FA
 2. FREEDOM OF CHOICE
 MA – NO CONSTRAINTS
 FA.-CONSTRAINED BY GAAP
 3.BEHAVIOUR IMPLICATIONS
 MA –CONCERN ABOUT HOW MEASUREMENTS
AND REPORTS WILL INFLUENCE MANAGERS
DAILY BEHAVIOUR
 FA.-CONCERN ABOUT HOW TO MEASURE AND
COMMUNICATE ECONOMIC PHENOMENA

MA & FA
 4.TIME FOCUS
 MA-FUTURE ORIENTATION-( FORMAL USE OF
BUDGETS & HISTORICAL RECORDS )
 FA-PAST ORIENTATION( HISTORICAL
EVALUATION )
 5.TIME SPAN
 MA-FLEXIBLE-
 FA-LESS FLEXIBLE

MA & FA
 6. REPORTS
 MA- DETAILED REPORTS
 FA- SUMMARY REPORTS
 7-DELINEATION OF ACTIVITIES
 MA-FIELD IS LESS SHARPLY DEFINED
 FA- FIELD IS MORE SHARPLY DEFINED

MA. IN SERVICE AND NONPROFIT
ORGNS.
 SERVICE ORGN.- ALL ORGN. OTHER
THAN MANUFACTURES,WHOLESALERS
AND RETAILERS
 ORGNS. DO NOT MAKE OR SELL
TANGIBLE GOODS

PROFIT SEEKING SERVICE ORGNS.
 1.PUBLIC ACCOUNTING FIRMS
 2.LAW FIRMS
 3.MANAGEMENT CONSULTANTS
 4.REAL ESTATE FIRMS
 5.TRANSPORTATION COMPANIES
 6.BANKS
 7.INSURANCE COMPANIES
 8.HOTELS

NON-PROFIT SERVICE ORGNS.
 1.HOSPITALS
 2.SCHOOLS
 3.LIBRARIES
 4.MUSEUMS
 5.GOT.AGENCIES

CHARACTERISTICS OF BOTH PROFIT- SEEKING AND NON-PROFIT
SERVICE ORGNS.
 1. LABOR IS INTENSIVE
 2.OUTPUT IS USUALLY DIFFICULT TO
DEFINE (WHAT IS CONTAINED IN THE
STUDENTS’ BRAINS)
 3.MAJOR INPUTS AND OUTPUTS
CANNOT BE STORED.

WATCHWORD OF INSTALLATION OF AN ACCOUNTING SYSTEM
 SIMPLICITY
 COMPLEXITY TENDS TO GENERATE
COSTS OF GATHERING AND
INTERPRETING DATA THAT OFTEN
EXCEED PROSPECTIVE BENEFITS
 KISS ( KEEP IT SIMPLE,STUPID)

COST BENEFIT AND BEHAVIOURAL CONSIDERATIONS
 WEIGHING ESTIMATED COSTS
AGAINST PROBABLE BENEFITS,THE
PRIMARY CONSIDERATION IN CHOOSING
AMONG ACCOUNTING SYSTEMS AND
METHODS

BEHAVIORAL IMPLICATIONS
 SYSTEM’S EFFECT ON THE BEHAVIOUR
(DECISION) OF MANAGERS. THE SYSTEM
MUST PROVIDE ACCURATE ,TIMELY
BUDGETS AND PERFORMANCE
REPORTS IN A FORM USEFUL TO
MANAGERS. IF MANAGERS DO NOT USE
ACCOUNTING REPORTS,THE REPORTS
CREATE NO BENEFITS

ACCOUNTING’S POSITION IN THE
ORGN.
 1.LINE AUTHORITY-AUTHORITY
EXERTED DOWNWARD OVER
SUBORDINATES
 2.STAFF AUTHORITY –TO ADVISE BUT
NOT COMMAND. IT MAY BE EXERTED
LATERALLY,OR UPWARD
 3.CONTROLLER (COMPTROLLER)- THE
TOP ACCOUNTING OFFICER OF AN
ORGANISATION

CAREER OPPORTUNITIES IN
MGT.ACCOUNTING
 1. CERTIFIED PUBLIC ACCOUNTANT
(CPA)- QUALI. OFFERED BY AICPA
 2.CERTIFIED MANAGEMENT
ACCOUNTANT (CMA)-QUALI.OFFERED
BY IMA

HIGHLIGHT OF CMA PROGRAMME
 1.ECONOMICS,FINANCE AND
MANAGEMENT
 2.FINANCIAL ACCOUNTING AND
REPORTING
 3.MANAGEMENT
REPORTING,ANALYSIS,AND
BEHAVIORAL ISSUES
 4.DECISION ANALYSIS AND
INFORMATION SYSTEMS.

FACTORS CAUSING CHANGES IN
MGT.ACCOUNTING TODAY
 1.SHIFT FROM A MANUFACTURING
BASED TO A SERVICE BASED ECONOMY
 2.INCREASED GLOBAL COMPETITION
 3.ADVANCES IN TECHNOLOGY

CONTROLLER AND TREASURER-
FUNCTIONS
 CONTROLLER
 1.PLANNING FOR CONTROL
 2.REPORTING AND
INTERPRETING
 3.EVALUATING AND
CONSULTING
 4.TAX ADMN.
 5.GOVT.REPORTING
 6.PROTECTION OF ASSETS
 7.ECONOMIC APPRAISAL
 TREASURERSHIP
 1.PROVISION OF CAPITAL
 2.INVESTOR RELATIONS
 3.SHORT TERM FINANCING
 4.BANKING AND CUSTODY
 5.CREDITS AND
COLLECTIONS
 6.INVESTMENTS
 7.RISK MANAGEMENT
( INSURANCE )

STDS .OF ETHICAL CONDUCT FOR
MGT.ACCOUNTANT
 1.COMPETENCE
 2.CONFIDENTIALITY
 3.INTEGRITY
 4.OBJECTIVITY

IN BRIEF MGT.ACCOUNTING
 MGT.ACCOUNTING CAN BEST BE
UNDERSTOOD AS A BALANCE BETWEEN
COSTS AND BENEFITS OF ACCOUNTING
INFORMATION COUPLED WITH AN
AWARENESS OF THE IMPORTANCE OF
BEHAVIORAL EFFECTS. EVEN MORE THAN
FINANCIAL ACCOUNTING,MGT.ACCOUNTING
SPILLS OVER IN TO RELATED
DISCIPLINES,SUCH AS ECONOMICS,THE
DECISION SCIENCES,AND THE BEHAVIO
 RAL SCIENCES.

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