Nature of Management Accounting Characteristics of Management Accounting:

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Nature of Management Accounting Characteristics of Management Accounting: 1. It is a selective technique. It compiles only the data from balance sheet and profit and loss, which is relevant and use... ful. 2. It is concerned with data not decisions. It can inform but not prescribe. 3. It deals with future. It is a kind of planning for the future because decisions are taken for future course of action. 4. It examines the cause and effect of relationship. Normally, a profit and loss account will show the amount of profit or loss for the year but does not tell us the reasons for it. Management accounting studies the causes of profit or losses. 5. It does not follow rigid rules and formats like financial accounting. The necessary info is provided in the shape of various statements or reports in order to meet the needs of the management. Objectives of Management Accounting: 1. To help the management in promoting efficiency. 2. To finalize budgets covering all functions of a business. 3. To study the actual performance with plan for identifying deviations and their causes. 4. To analyze financial statements to enable the management to formulate future policies. 5. To help the management at frequent intervals by providing operating statements and short-term financial statements. 6. To arrange for the systematic allocation of responsibilities for the implementation of plans and budgets. 7. To provide a suitable organization for discharging the responsibilities. [Show More]

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