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The Practical Role of Management Accounting Essay

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Below is an essay on "The Practical Role of Management Accounting" from Anti Essays, your source for research papers, essays, and term paper examples.

The practical role of the management accountant is to increase knowledge within an organization using a set of practices and techniques aimed at providing managers with financial and operational information to help them maintain effective control over corporate resources and reduce the risk associated with making decisions. Therefore the information generated by the management accountant should meet the following requirements:
1)      allocate costs between costs of goods sold and inventories for internal and external profit reporting
2)      provide relevant information to help managers make better decisions
3)      provide information for planning, control and performance measurement
 In order to calculate profit for any given period, costs need to be charged to each individual product before matching them to revenues. This is to distinguish between costs of goods sold and costs associated with closing inventories and form the basis for determining the inventory valuation, current period’s costs and calculating profit, and also form the basis for determining the stock valuation to be included in the statement of financial position. This information is essential for meeting external financial accounting requirements and to produce internal profit reports.
To provide relevant information for better decision making, the management accountant produces routine and non-routine reports. Routine reports relates to the profitability of various segments of the business such as products, services, customers and distribution channels in order to ensure that only profitable activities are undertaken. These reports also serve the purpose for resource allocation and product mix and discontinuation decisions. In some situations, cost information extracted from the costing system also plays a crucial role in determining selling prices, especially in markets where customized products and services are provided that do not have readily available market prices. Non-routine...

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