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What is the Nature and Characteristics of Management Accounting?

Last Modified: 5 January, 2023 Leave a Comment

Management accounting is the preparation and presentation of professional knowledge, and skills. In order to assist in the planning and control of the policies of the equipment and the management of operations.

Nature and Characteristics of Management Accounting
Features and Nature of Management Accounting

The work is edited by such techniques and trends with special knowledge and skill.

Force on the nature of cost elements special attention is given to the nature of cost elements in management accounting.

Because of the various options for making this right decision are evaluated by accounting based on cost-benefit analysis.

8 Key Features and Nature of Management Accounting

The followings are the characteristics and nature of management accounting:

1. Management Accounting is Service work

Managing Accounting is a service task.

In which the information required for managers to determine the policies of the institution and make judicious decisions is made available on time.

This information may be related to the cost, prices, returns, profits, and economic elements.

Which are used to achieve the definite goal of the management institution?

2. Incorporation of Multiple Methods

Managing Accounting is a multi-system that involves many topics, systems, methods, procedures, formats, and other related facts to managers.

In addition to the practical use of knowledge of economics, statistics, business, psychology, etc., along with cost accounting, financial accounting, budget control, and standard cost, more techniques are used.

3. Future Related

Management accounting does not depend on past facts only. The past fact explains “only what has happened” while “what the level of efficiency should be” does not light up.

Therefore, management accounting places more emphasis on the future.

Under this plan, plans and forecasts are prepared for the future and when this future is seen as present.

It is a critical analysis – a budget control system and standard cost accounting and variance analysis system are used.

4. Rule of Uncertain Nature

The rules of management accounting are not of a certain nature as in financial accounting.

So, In order to fulfill the specific purpose of the management, the managing accountant can present the data by making rules by itself, in addition to the commonly accepted rules on different subjects, so that managers are able to make decisions.

5. Force on Nature of Cost Elements

Special attention is given to the nature of cost elements in management accounting.

Because the various options for making this right decision are evaluated by accounting based on cost-benefit analysis.

Hence, the cost is divided into Fixed, variable, and semi-variable.

Many methods of management accounting, such as marginal cost analysis, direct cost analysis, cost-quantity-profit analysis, etc. are based on this classification.

On the basis of the specialty of managing to account, it is said that “Management accounting is an extension of the managerial aspect of cost accounting”.

6. Selective System

Management Accounting is selective in nature. Different similar nature and specialty schemes are studied comparatively.

The plan which gives the most benefit and is the best is chosen.

In the same way, only the same information is provided by the many information available to a subject before management. Whose information is important for management?

7. Facts Presentation in Management Accounting

The managing accountant raises the necessary element to come into effect.

And the analysis renders them in front of managers and does not make decisions themselves. Decision-making is the work of management.

It depends on the skill and ability to manage, and to what extent it uses this information.

It’s like a map that tells a traveler who travels in some direction to tell where he will go.

8. Cause Result Analysis

Management accounting “puts special emphasis on causes and results”.

For example, only the quantity of profit is known in financial accounts.

Whereas in management accounting it is known that the benefits came from the which reasons.

Hence,  the cost is divided into Fixed, variable, and semi-variable.

Many methods of management accounting, such as marginal cost analysis, direct cost analysis, cost-volume-profit analysis, etc. are based on this classification.

On the basis of the specialty of management accounting, it is said that “Management accounting is an extension of the managerial aspect of cost accounting”.

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