Importance Of Management Accounting

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Management accounting is the “term used to describe the accounting methods and information which complies with special knowledge and ability, assist management in its task of maximizing losses. Shilling (1982) also asserted that “accounting which serves management by providing information to the cost or profit associated with some portion of firm total operation is called management accounting. Management Accounting Team of Anglo-American Council on Productivity in its report (1980) described management accounting as thus: “the presentation of accounting as to assist management in the creation of policy and in the day to day operation of an undertaking. According to Wolfgang (2002), management accounting is the process of measuring and reporting…show more content…
Management Accounting and Decision Making Management accounting decision making process must always help executives make the best possible strategic decision. Decision making success according to Bromwich (1990) depends on both the decision quality and executive effectiveness. - Decision Quality: In today’s global market where there are too many variables for one single top executive to consider in order to make the best possible strategic decision, it is mandatory to consider as many beliefs, perspectives, concepts etc. as possible. Hence the quality of a strategic decision depends on the diversity of ides considered to make such decision. However, the more ideas and perspective are considered to make a strategic decision, the more conflict is likely to emerge in the managerial decision making process. - Execution Effectiveness: If the people in charge of executing the decision making commit them to such decision, the execution is more likely to be effective. On eth contrary, if the people in charge of executing the decision making do not commit themselves to such decision, the execution is less likely to be…show more content…
Just-in-time (JIT): During the last two decades of the 20th century, many companies implemented just-in-time programs designed to minimize the amount of inventory on hand. These companies identified significant benefits from reducing all types of inventories—raw materials, work-in-process, and finished goods—to the lowest possible levels. These benefits consist principally of reduced inventory holding costs (such as financing and warehousing costs), reduced losses due to inventory obsolescence, and more effective quality control. The relationship between JIT and TQM is important. Many defects in raw materials or the production process can be ignored indefinitely if high-quality materials can be substituted for defective materials, and if additional first-quality units can be produced to replace defective units. In a non-JIT environment, defective materials and half-finished units might be set aside in a corner of the factory. However, under a JIT program, if raw materials received at the factory are defective, there might be no first-quality materials on hand to substitute for the defective materials. In extreme cases, the production line might be shut down until first-quality materials are received. Hence, a JIT program can focus attention on quality control in ways not generally possible in a non-JIT

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