Tuesday, December 16, 2008

(33).---MANAGEMENT ACCOUNTING FOR BUSINESS

The term ‘Management accounting for business’ is referred to the arrangement and adoption of all information related to accounts which assists the department heads to take various decisions in concern to managerial operations and control in an organization.

Management accounting for business is also associated with various accounting processes at different steps like preparing accounting statements, finding the cots of products, identifying labor costs, preparing budgets and thus communicating all the information to decision makers which could help them in taking important decisions related to the organization. Management accounting for business also includes preparing accounting reports for shareholders, creditors and other authorities.

There have been some significant changes in the working practices related to management accounting for business in past 20 years. Traditionally, accounting practices were only related to comparing the budgeted cost and the actual costs of labor and raw material. But with the changing time, the innovative accounting practices have been used in the whole process of cost analysis in accordance with the modern business developments.

Management accounting for business plays a vital role in determining the manufacturing cost of a product, especially when the product is in the designing stage. This helps the organization in saving huge money by making some insignificant changes. Modern accounting techniques also help in defining the amount of work activities and the ways of controlling the cost effectively.

To conclude, management accounting for business plays a key role in defining the product cost, budget, service and labor costs, assisting the decisions makers and communicating the information in order to benefit the organization.

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