Literature Review Of The Managerial Accounting System

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Literature Review Management accounting uses financial information to perform effective changes. Accounting numbers gives objective feedback about profitability and efficiency that help to identify the problems and opportunity areas. To be helpful, managerial accounting system must perfectly reflect company activities, getting helpful information in adequate details without taking more time than their worth. Managerial Accounting information must provide well-timed and valid information to facilitate effects to control cost, to measure and enhanced productivity, and to create improved production processes (Johnson and Kaplan, 1987). The management accounting system also report exact product cost so that pricing decisions, introducing new products,…show more content…
The aim of management accounting is to provide applicable information for decision making, by interpretation of qualitative factors that should be studied when implementing managerial accounting decisions. More and more firm believe that quality information is judgmental to their success. However, not everyone turned this believe into effective action. Poor quality information can have important effect on business (Strong, Lee&Wang, 1977).In addition; many organizations have experienced the adverse impact of decision based on information of minor quality (Huang, Lee&Wang, 1999). Managerial Accounting can be specified by availability of resources, timeliness of information, external reputation, timely information and creditor…show more content…
A management information system must provide timely information. Managers need rapid information on sales; bottom-line profit and other information metrics soon after they occur in order to make changes to avoid pending problems. For instance, if a manager receives a report on last week's sales indicating that there were very few sales in Houston, she can diagnose the problem; it could be a shipping failure, a marketing issue or one of a various of other business challenges that can be solved quickly once identified. Accounting is a language that communicates economic information to the people who have interest in an organization, managers, shareholders, potential investors, creditors, government and the employee (Hogget and Edward, 1987). Most managerial accounting figures are not authentic to the public; the company’s operation may be inadvertently disclosed to creditors. This includes the opening and closing plants and retail stores, management turnover information and rumor about new

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