2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Doing business, carrying out production activities by a participant in commodity-money relations is a complex and multifaceted process that requires constant attention and control. The main functions of management accounting are designed to help the owner make timely informed decisions based on reliable and up-to-date information.
Purpose of management accounting
Accounting information is absolutely accurate and reliable, as it is received and systematized in accordance with established requirements and rules. The accountant enters data on the completed financial and economic transaction on the basis of properly executed documents. Therefore, data on the activities of the enterprise, based on financial accounting information, do not meet the requirements of efficiency in making management decisions.
In today's economic conditions, a manager who owns the most up-to-date information will have an advantage overother business participants. The functions of management accounting are precisely to provide the business owner with the necessary information to facilitate the timely adoption of management decisions.
Information collected for the purpose of management accounting contains not only the information that is the object of financial accounting, but also those that are not documented, but are more operational.
Based on this, we can determine the main functions of management accounting:
- Collect information needed by management to make decisions and run the business.
- Determination of actual performance indicators and their deviations from planned values.
- Assessing the performance of individual functional departments of the company.
Object
The most important function of management accounting is to form the relationship between the process itself and the adoption of managerial decisions.
Based on the fact that management is an impact with the aim of leading and obtaining the desired result, we can single out the main areas of management accounting:
- planning;
- organization and coordination;
- control;
- stimulation.
Given these functions, management accounting objects can be divided into production resources, business processes and results.
Production resources
To resources, based onthe use of which production activities are carried out include labor, intangible assets, inventories and fixed assets.
Manpower is the staff of the organization, consisting of workers of different professions and skill groups. The competitiveness and success of an enterprise directly depends on the quality composition and effective use of these resources.
Intangible assets are trademarks, patents, usage rights, software products. That is, everything that is not clothed in a physical form, but has a value estimate.
Inventories are all those physical components of the production process, which, as a result of their single and full use, make it possible to obtain finished products and form its cost.
Fixed assets (funds) are reusable assets of an enterprise that gradually transfer their value to finished products through depreciation.
Business processes
This group of accounting objects includes the main activities of the economic complex: the supply of production, the production process itself, marketing activities. All these areas are coordinated by organizational activities that perform the functions of the management accounting system listed below.
- Creating a business structure, allocation of sites, workshops, departments, other functional structures.
- Creation of a system of information interaction between the sections of the company, internal communicationlinks that support planning, monitoring and evaluation processes.
- Coordination of the activities of various production sites in order to manage and achieve the planned result.
Types of information used
The main function of management accounting is to provide management with the information that is necessary to control activities and make management decisions. Sources of such information are divided into those obtained from accounting data and extra-accounting.
Sources of information
Management accounting functions make it possible to use the following sources of information: statistical, accounting, operational accounting and sample data.
From accounting data you can get the most reliable objective cost estimate of business transactions, the totality of assets by composition and sources of their formation. This information is based on the method of continuous documentation, systematization and grouping by accounting items.
Statistical accounting information is generalized information based on financial accounting data about mass phenomena and processes that allow you to see certain economic patterns.
Operational accounting information collected at individual production sites provides faster than financial and statistical accounting, obtaining the required data. The value of operational accounting for the purposes of current management is difficult to overestimate. Based on daily revenue or shipment data, primarythe link of managers plans and corrects the production process "in hot pursuit", which allows you to quickly respond to the slightest economic changes. It is this efficiency that allows you to perform the service functions of management accounting.
Selected data is information obtained from a more in-depth study of credentials in a particular direction. Spot checks are carried out if necessary to obtain detailed information on any direction of the production process.
Extra-account sources of information
This type of information includes information obtained during external and internal audits, tax audits, control of various supervisory services.
Also, extra-accounting information can include data from production meetings, contacts with counterparties, guidelines and clarifications from higher-level organizations.
Implementation of the controlling task and the function of management accounting is impossible without an analysis of the implementation of intermediate estimates and the resulting business plan. For this purpose, regulatory information is used, contained, for example, in reference books, technical documentation, production passports.
Nature of information used in management accounting
The information used by managers is divided into quantitative and qualitative.
Quantitative information is information that can be expressed in any numerical indicators: rubles, pieces, liters. It is provided in cash.(debt, revenue) or in natural units (productivity in pieces, inventory balances in tons).
Qualitative information highlights as yet unquantified issues. Such information can be found in explanatory notes, summaries.
System
Management accounting by a separate subdivision is feasible only at large manufacturing enterprises. When making management decisions, small business owners rely on their own observations or on generalized accounting information provided by an accountant. In any case, it must be integrated into the general information system of an economic entity, since the functions of accounting, management accounting, statistical are closely interconnected and cannot be implemented separately.
Only with the coexistence of all systems is it possible to adequately reflect all information and minimize the cost of management.
The functions of accounting and management accounting are closely interrelated. The production management system will not be able to fully function without establishing interaction with other accounting systems - statistical, accounting, production. Without collaboration, there is a risk that management will use inaccurate, untimely, or incomplete information.
Methodological foundations of management
The Ministry of Economic Development in 2002 developed and recommended for use Guidelines for the introduction and implementation of managerialaccounting for Russian manufacturers. According to this document, management reporting has the following structure:
- Comprehensive reports produced on a regular basis at fixed time intervals. Such reports contain final comprehensive information on production results, global indicators.
- Reporting on individual indicators is provided on any required date and allows you to identify problematic areas of activity that require special attention.
- Analytical reporting can be prepared both regularly and on demand, but is intended for a detailed in-depth analysis of any aspect of financial and economic activity.
Similarities and differences between the two concepts
Both financial (accounting) and managerial accounting carry out a systematic collection of information. But if in accounting this information is systematized continuously and documented with the aim of continuous accounting of all economic factors, then management accounting structures information for analysis and decision-making.
It is more convenient to reflect the difference in terminology in the table.
Parameter | Management accounting | Financial accounting |
Accounting purpose | Providing leadership with information | Reporting to external users |
Object of study | Enterprise as a whole and its divisions | Entire Enterprise |
Obligation reference |
Optional | Required |
Users | Domestic | External and internal |
Methodology | Self-installed |
Regulated legislative |
Time interval | Past and future | Past |
Reliability information |
Incomplete | Full |
Indicators used | Natural, quality, value for money | Values |
Periodicity | Installed | Any |
Relevance | High | Low |
As can be seen from the table, management accounting, unlike financial accounting, is not mandatory. It does not aim at the continuous collection of information, but its information is more timely and operational.
The principles and functions of management accounting are based on the need to immediately inform the company's management about ongoing changes and make timely management decisions.
Organization
Implementation of management accounting is unthinkable without interaction with the financial. Accounting information about the occurred economic facts is used by management for its own purposes.
The most important area of management accounting is cost and cost management. For organizing and planning expenses apply:
- extrapolation of past dataperiods for the future, that is, planning based on the study of costs that have already taken place;
- standard-cost system, that is, planning based on established production standards.
Management accounting functions allow you to choose the most fair method of allocating and planning costs.
The task of management accounting is to provide the management of the enterprise with the information necessary to make life-changing decisions with the greatest efficiency. The main requirement for information is timeliness and efficiency, not thorough accuracy.
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