Past few weeks I have been battling with a course in account which I will like to share here at hive. It's about Management of accounting techniques. These are some few step I learnt about which are:
Planning:
The management accountant's main contribution to planning lies in the preparation of budgets.
Control:
Control in the management sense has been defined as "the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisation's goals". As planning involves the setting of goals and objectives, control may be viewed as its counterpart in the management process.
Cost Control:
The book keeping aspect of management accounting is also a useful tool for cost control in small businesses. It facilitates a permanent record of costs incurred in conducting the business.
Standard Costing:
The use of standard casts has the added ahalitage of eniging greater degree of cost-consciousness within the organisation, standarts are ve against which actual cuts are compared in ander to determine variances from the standard Unfavestable variances then be investgetest in order to delermme posuble explanation for the deviation. In this manner petten atras may be detected and dealt with expediently
However, the benefit to be derived from a standard costing systems must always be weighed against the cost of establishing it. Hence, one may discover that while standard costs may be effectively and efficiently employed within a small firm, the relative costs of setting up and implementing such a system for a local bakery may be prohibitive
Credit Control:
This is another area of great importance in management accouting Naturally, in the case of the small businesses which operate strictly on a cash basis, this area appear to be unimportant. However it is probably not uncommon to find that small retailer or manufacturer who supplies several regular customers will provide credit facilities as a normal part of trading activities
In such instances, proper credit control is essential for ensuring that cash proceeds are realised on a timely basis. Appropriate credit terms, supplemented with accurate record keeping and skittal ratio analysis, can enable the owner manager to identify "bad-risk customers and appropriate action
Decision Making:
Management accounting techniques are useful for effective decision making An understanding of the concepts of relevant costs, cost-volume-profit relationships and the contribution approach to decision making may facilitate more efficient and effective decision by enabling the immediate determination of relevant factors that have to be considered Guidelines, such as the need to cover fixed costs or the concept of a positive contribution margin.
Bookkeeping bas such associated with accounting thinking In the pupular usage many people use it to measure the worth of accounting in a buck such as the the best that management accounting is much mus oncerned with the economics of less than with the reading af pad monetary accounting
Uncertainty and Management Accounting:
Management is conced with the hate and the only thing contain about the future is that it is uncertain Management accountants the shutd incorporate this uncertanty into their works preferably in the form of pbability assessment strangely enough this has hardly been done up the present time, perhaps because accountants are used to handling the exactly known figures that are in the past. However, this trend is changing and as the emphasis in management accounting swings away from accounting towards managed, probability concepts will certainly become another feature of management accounting
New Techniques in Management Accounting:
Indeed it should be observed that a whole group of techniques has recently emerged in the world of management accounting. Many of these emerged as a result of using a mathematical approach to the measurement of economic performance and efficiency and were developed in the field of operations research these techniques include tinear programming. and a range of probability based techniques that embrace topics such as dechion theory and queuing. Increasingly, statistics are also playing important part in the Work of the management accountants
THE ROLES OF THE MANAGEMENT ACCOUNTANT
It is the duty of the management accountant to
(a) to plan a profitabile future for the business
(b) To install and maintain an accounting system to monitor the performance of the Business
(c)To identify problem
(d) record transactions by producing accounting statements
BUSINESS OBJECTIVES
In order to assist management by providing information that aid decision- making and control, the management accountant must be aware of the firm's objectives
Profit Maximisation
Profit maximisation means maximising the naira income of firms. The reasons for identifying the maximisation of the present value of future cash flows as a major objective are
(a) it is equivalent to maximising shareholders value
(b) It is unlikely that any other objective is as widely applicable in
(c) measuring the ability of the organisation to survive in the future: although it is unlikely that maximising the present value of future cash flow that can be realised in practice, it is still important to establish the principles necessary to achieve this objective.
(d) it enables shareholders as a group in the bargaining coalition to know how much the pursuit of other goals is costing them by indicating the amount of cash required to achieve their objectives.
GOAL CONGRUENCE
One of the most important functions of management is to harmonise as tar as is practicable the goals of the participants and sub-units with those of the organisation as a whole. This function is known as Goal Congruence.
The management accounting system should encourage all employees including management to act in a manner which contributes to the overall objectives of the organisation, that is, the employees objectives and the company's objectives would in, ideal circumstances coincide The system and the approach adopted by the management accountant should motivate staff by means of genuine good communication, rapid feedback
Goals of Groups other than Owners:
An assumed objective of maximising the wealth of owners, to the exclusion of other groups in a firm has been widely criticised in recent years, it is argued that the firm is a coalition of groups, each pursuing its own objectives, and each of which is in a position to exert influence on those responsible for taking decision within the firm. Groups in the 'coalition" might include the proprietors (shareholders in the case of limited liability companies). managers, trade unions, creditors, various employees and government. Groups ether than the proprietors are able to exert pressure on the decision makers in the firm
The Goals of individual:
These individuals have their own personal goals. Similarly, group of individual that form the functional divisions of the business, each group identifying with its own goals. The sales manager will want to have large stocks of all products so that no customer is refused or has to wait long for delivery. The production manager will want to have long production runs to retice set-up casts and training. The purchasing manager prefers to buy large quantities of materials, to take advantage of balk discount and lower masport . The financial manager will want to maintain records of the working capital tied up in taw materials or finished goods stocks.
