Management

Management is the coordination and administration of tasks to achieve a goal. Such administration activities include setting the organization’s strategy and coordinating the efforts of staff to accomplish these objectives through the application of available resources. Management can also refer to the seniority structure of staff members within an organization.

To be an effective manager, you’ll need to develop a set of skills, including planning, communication, organization and leadership. You will also need extensive knowledge of the company’s goals and how to direct employees, sales and other operations to accomplish them.

Five basic operations of a manager

In general, there are five basic functions of a manager:

1. Setting objectives

Setting and achieving objectives is the primary way a manager accomplishes and maintains success. They must also be able to convey them to their staff or employees in a compelling manner. For instance, a restaurant manager could state they want to improve service times and remind employees that faster service increases revenue and tips.

2. Organizing

Managers evaluate the type of work, divide it into achievable tasks and effectively delegate it to staff. Organization consists of a series of relationships among individual staff as well as departments or entities inside the organization. It is the manager’s responsibility to ensure that these individuals and entities work together in harmony, which includes motivating staff members and departments to stay on task. A good manager is skilled at building interpersonal relationships among their team members and can troubleshoot when members confuse their encounter challenges.

Organization also requires a manager to establish relationships of authority among their team members. Maximizing organizational arrangements can help businesses enhance the company’s efficiency in the market, reduce the costs of business and improve productivity.

3. Motivating the team

In addition to the tasks of organization and delegation, motivation includes having the skills to handle different types of personalities in a team. An effective manager must know how to form and lead successful teams and know how to galvanize team members around a cause.

4. Devising systems of measurement

Managers need to set targets or key performance indicators that the team aims for and then generate ways to measure whether their team is on track to meet those goals. Because it can be challenging to come up with measurable ways of understanding performance, managers must often be creative and thoughtful. However, like the other functions of management, measurement is critical to improving business performance.

5. Developing people

In addition to leading their team toward a goal and measuring their progress along the way, good managers invest in their staff’s development. Managers can, for example, work with their team to help them set goals to move up in their careers.

Managers must have leadership skills to use these five operations successfully. They are responsible for coaching their team members by helping them recognize their strengths and weaknesses and improve their performance. Different managers may have different styles of leadership. Regardless of their style, managers should develop their leadership skills to be effective supervisors.

Management concepts

A manager needs to understand a few simple ideas to employ the five basic operations. These concepts are essential to ensure their team comes together to reach the company's goals:

Control

Employees of an organizatiñon need to understand the goals that they are aiming for as well as the measurement that will be used to determine whether they have been successful. Different staff members in a company have different roles that entail separate levels of responsibility. A manager must have control over what the members do, how they do it and how to measure their progress. Control over these factors helps a manager reach success.

Planning

The best managers know that planning is critical before the implementation of any strategy, but it is also an ongoing activity. Planning does not end when implementation begins. Rather, management needs to be prepared to answer the questions of who, what, when and where a team içczccçcccccç so ns working to implement the organization’s mission. Planning should include selecting objectives as well as implementing them.

Staffing

Staffing is an underappreciated but crucial function of management. Managers need to ensure that they have the right people for the job, but they also need to pay attention to issues like organizing workplace policies. The company needs to retain the best talent by providing incentives such as benefits, paid time off and a thorough training program.

There are several ways to advance your management skills, including:

Communicate

It is important to communicate with your team so you can understand their needs, evaluate their progress and help them achieve their goals.

Be positive

You should be the one to set an example for your team to follow. Be positive during your interactions with your team so they feel more comfortable communicating with you.

Train when needed

Assess the skills of your team and see if you could improve any areas with training. Training also helps your team learn new skills and fosters growth.

Collaborate

As a manager, you should feel comfortable delegating tasks, but you also work with your team to accomplish common objectives. Collaborating with your team will also allow you to see if there’s anything you can do to help individual teammates or the team as a whole.

There are several ways to advance your management skills, including:

Communicate

It is important to communicate with your team so you can understand their needs, evaluate their progress and help them achieve their goals. Be positive. You should be the one to set an example for your team to follow. Be positive during your interactions with your team so they feel more comfortable communicating with you. 

Train when needed

Assess the skills of your team and see if you could improve any areas with training. Training also helps your team learn new skills and fosters growth.

Collaborate

As a manager, you should feel comfortable delegating tasks, but you also work with your team to accomplish common objectives. Collaborating with your team will also allow you to see if there’s anything you can do to help individual teammates or the team as a whole. 

Practice

Perhaps the best way to acquire new skills is to practice them in a real-life management setting. Gaining on-the-job experience in these skills will help you on the promotion ladder. Do your best for your team, serve as a leader and treat your team fairly.

Nature of Management 

• Management as a systematic process of planning, organizing, staffing, leading and controlling. As managers, people carry out the managerial functions of planning, organizing, staffing, leading, and controlling.
• The concepts and activities of management apply to all levels of management, as well as to all types of organizations and activities managed.
• The aim of all managers is universal: to create a surplus.
• Management identifies a special group of people whose job is to direct the effort and activities of other people towards common objectives.
• Management is concerned with productivity, thereby implying efficiency and effectiveness. Factors of production of an organization such as labor, capital, land, equipment, etc. are used efficiently and effectively prepared through management for achieving organizational goals.
• Management has to pay attention to fulfilling the objectives of the interested parties.
• Management is the art and science of getting work done by other peoples.
• “Maximum results with the minimum of efforts” is the motto of management of any organization.

Features of Management

Management is the process of setting and reaching goals effectively and efficiently. Management process has some qualities or features;

• Management is Associated with Group Efforts
• Management is Purposeful
• Management is Accomplished Through the Efforts of Others
• Management is Goal-oriented
• Management is Indispensable
• Management is Intangible
• Management can Ensure Better Life

Management is Associated with Group Efforts

It is usual to associate management with a group.

Although people as individuals manage many personal affairs, the group emphasis on management is universal.

Every enterprise entails the existence of a group to achieve goals. It is now established that goals are achieved more readily by a group than by any one person alone.

Management is Purposeful

Wherever there is management, there is a purpose. Management deals with the achievement of something definite expressed as a goal or objective.

Management success is commonly measured by the extent to which objectives are achieved. Management exists because it is an effective means of getting the necessary work accomplished.

Management is Accomplished Through the Efforts of Others

Management is sometimes defined as “getting things done through others’ efforts.”

Besides the manager of a firm, there may be accountants, engineers, system analysts, salesmen and a host of other employees working but it is the manager’s job to integrate all their activities.

Thus it can well be said that participation in management necessitates relinquishing the normal tendency to perform all things oneself and getting tasks accomplished through group efforts.

Management is Goal-oriented

Managers focus their attention and efforts on bringing about successful action. Successful managers have an urge for accomplishment.

They know when and where to start, what to do with keeping things moving, and how to follow a goal-oriented approach.

Management is Indispensable

Management can neither be replaced nor substituted by anything else.

Even the computer which is the wonderful invention of the twentieth century can only aid but not replace management.

We know that the computer is an extremely powerful tool for management.

It can widen a manager’s vision and sharpen his insight by supplying more and faster information for making key decisions.

The computer has enabled the manager to conduct analysis far beyond the normal analytical capacities of man.

But what happens, in reality, is that the computer can neither work by itself nor can it pass any judgment.

The manager plays his/her role by providing judgment and imagination as well as interpreting and evaluating what the information/data mean in each case.

Management is Intangible

Management is often called the unseen force; its presence is evidenced by the results of its efforts – motivation among employees, discipline in the group, high productivity, adequate surplus, etc.

Conversely, the identity of management may also be felt by its absence or by the presence of its direct opposite mismanagement. The consequence of mismanagement is anybody’s guess.

Management can Ensure Better Life

A manager can do much to improve the work environment, stimulate people to perform better, achieve progress, bring hope and accomplish better things in life.

The study of management has evolved into more than just the use of means to achieve ends; today it includes moral and ethical questions concerning the selection of the right ends towards which managers should strive.

Management is the science and art of getting people together to accomplish desired goals and objectives by coordinating and integrating all available resources efficiently and effectively.

Management is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that assists executives in fulfilling organizational objectives.

It helps the management to perform all its functions, including planning, organizing, staffing, direction, and control. In other words, the field of accounting that provides economic and financial information for managers and other internal users is called management.

Characteristics/Nature of Management Accounting

Management accounting is a technique of selective nature. It does not use the whole data provided by financial records. It selects and picks up only that information form different financial records (such as profit and loss account or balance sheet), which are relevant and useful to the management to arrive at important decisions on different aspects of the business.

Management accounting is concerned with the future. It collects and analyses data to plan the future. The primary function of management is to decide bout the future course of action. Management accounting, with the help of different techniques, formats the future course of action.

Management Accounting makes available useful information which helps the management in planning and decision-making. It can only provide information but cannot proscribe. It is up to management to what extent it. It can make use of the information depending upon its efficiency and wisdom.

Management accounting studies the relation between causes and effects.

Financial accounting does and analyses the causes responsible for profits or losses. Management accounting attempts to study the cause-and-effect relationship by analyzing the different variables affecting the profits and profitability of the business.

Management accounting is no bound by the rules of financial accounting. Financial accounting procedures are designed based on Gap.

Management accounting is a part of accounting. It has developed out of the need for making more use of accounting for making managerial decisions.

Management accounting helps in the performance of each of these functions in the following ways:

Provides data

Management accounting serves as a vital source of data for management planning. The accounts and documents are a repository of a vast quantity of data about the past progress of the enterprise, which is a must for making forecasts for the future.

Modifies data

Management accounting modifies the available accounting data rearranging in such a way that it becomes useful for management.

The modification of data in similar groups makes the data more useful and understandable. The accounting data required for management decisions is properly compiled and classifies.

For example, purchase figures for different months may be classified to know total purchases made during each period product-wise, supplier-wise, and territory-wise.

Communication

Management accounting is an important medium of communication. Different levels of management (top, middle, and lower) need different types of information.

The top management needs concise information at relatively long intervals, middle management needs information regularly, and lower management is interested in detailed information at short-intervals.

Management accounting establishes communication within the organization and with the outside world.

Analyses and interprets data

The accounting data is analyzed meaningfully for effective planning and decision-making. For this purpose, the data is presented in a comparative form, Ratios are calculated, and likely trends are projected.

Serves as a means of communicating

Management accounting provides a means of communicating management plans upward, downward, and outward through the organization.

Initially, it means identifying the feasibility and consistency of the various segments of the plan. The later stages it keeps all parties informed about the plans they have been agreed upon and their roles in these plans.

Facilitates control

Management accounting helps in translating given objectives and strategy into specified goals for attainment t by a specified time and secures the effective accomplishment of these goals efficiently. All this is made possible through budgetary control and standard costing, which is an integral part of management accounting.

Uses also qualitative information

Management accounting does not restrict itself to financial data for helping the management in decision making but also uses such information that may be capable of being measured in monetary terms. Such information may be collected from special surveys, statistical compilations, engineering records, etc.

To assist in planning.

Management Accounting assists the management in planning as well as to formulate policies by making forecasts about the production, selling the inflow and outflow of cash, etc.

Not only that, but it may also forecast how much may be needed from alternative courses of action or the expected rate of return from that place and at the same time decides upon the programmed of activities to be undertaken.

To assist in organizing.

By preparing budgets and ascertaining specific cost centers, it delivers the resources to each center and delegates the respective responsibilities to ensure their proper utilization.

As a result, an interrelationship grows among the different parts of the enterprise.

Decision-Making

Management accounting furnishes accounting data and statistical information required for the decision-making process, which vitally affects the survival and the success of the business.

Management accounting supplies analytical information regarding various alternatives, and the choice of management is made easy.

To assist in motivation.

By setting goals, planning the best and economic courses of action, and also by measuring the performances of the employees, it tries to increase their efficiency and, ultimately, motivate the organization as a whole.

To Coordinate

It helps the management in coordination the whole activities of the enterprise, firstly by preparing the functional budgets, then co-coordinating the whole activities of the enterprise, firstly, by preparing the functional budgets, then co-coordinating the whole activities by integrating all functional budgets into one which goes by the name of ‘Master Budget.’

In this way, it helps the management by con-coordinating the different parts of the enterprise. Besides, overall coordination is not at all possible without budgetary control.’

To Control

The actual work done can be compared with ‘Standards’ to enable the management to control the performances effectively.

Functions of Management

The basic function of management accounting is to assist the management in performing its functions effectively. The functions of the management are planning, organizing, directing, and controlling.

Provides data

Management accounting serves as a vital source of data for management planning. The accounts and documents are a repository of a vast quantity of data about the past progress of the enterprise, which is a must for making forecasts for the future.

Modifies data

Management accounting modifies the available accounting data rearranging in such a way that it becomes useful for management.

The modification of data in similar groups makes the data more useful and understandable. The accounting data required for management decisions is properly compiled and classifies.

For example, purchase figures for different months may be classified to know total purchases made during each period product-wise, supplier-wise, and territory-wise.

Communication

Management accounting is an important medium of communication. Different levels of management (top, middle, and lower) need different types of information.

The top management needs concise information at relatively long intervals, middle management needs information regularly, and lower management is interested in detailed information at short-intervals.

Management accounting establishes communication within the organization and with the outside world.

Analyses and interprets data

The accounting data is analyzed meaningfully for effective planning and decision-making. For this purpose, the data is presented in a comparative form, Ratios are calculated, and likely trends are projected.

Serves as a means of communicating

Management accounting provides a means of communicating management plans upward, downward, and outward through the organization.

Initially, it means identifying the feasibility and consistency of the various segments of the plan. The later stages it keeps all parties informed about the plans they have been agreed upon and their roles in these plans.

Facilitates control

Management accounting helps in translating given objectives and strategy into specified goals for attainment t by a specified time and secures the effective accomplishment of these goals efficiently. All this is made possible through budgetary control and standard costing, which is an integral part of management accounting.

Uses also qualitative information

Management accounting does not restrict itself to financial data for helping the management in decision making but also uses such information that may be capable of being measured in monetary terms. Such information may be collected from special surveys, statistical compilations, engineering records, etc.

To assist in planning.

Management Accounting assists the management in planning as well as to formulate policies by making forecasts about the production, selling the inflow and outflow of cash, etc.

Not only that, but it may also forecast how much may be needed from alternative courses of action or the expected rate of return from that place and at the same time decides upon the programmed of activities to be undertaken.

To assist in organizing.

By preparing budgets and ascertaining specific cost centers, it delivers the resources to each center and delegates the respective responsibilities to ensure their proper utilization.

As a result, an interrelationship grows among the different parts of the enterprise.

Decision-Making

Management accounting furnishes accounting data and statistical information required for the decision-making process, which vitally affects the survival and the success of the business.

Management accounting supplies analytical information regarding various alternatives, and the choice of management is made easy.

To assist in motivation.

By setting goals, planning the best and economic courses of action, and also by measuring the performances of the employees, it tries to increase their efficiency and, ultimately, motivate the organization as a whole.

To Coordinate

It helps the management in coordination the whole activities of the enterprise, firstly by preparing the functional budgets, then co-coordinating the whole activities of the enterprise, firstly, by preparing the functional budgets, then co-coordinating the whole activities by integrating all functional budgets into one which goes by the name of ‘Master Budget.’

In this way, it helps the management by con-coordinating the different parts of the enterprise. Besides, overall coordination is not at all possible without budgetary control.’

To Control

The actual work done can be compared with ‘Standards’ to enable the management to control the performances effectively.

Purpose and Objectives of Management

Uses of Information

The primary functions of management are the uses of information. It presents accounting information in a form that enables the management, investors, and creditors to analyze the financial statements.

Planning and Policy Formulation

Planning is deciding in advance what is to be done. It helps the management of ineffective planning. It provides costing and statistical data to be utilized in setting goals and formulating future policies.

Decision Making

All management work is accomplished by decision making.

Decision making is defined as the selection of a course of action from among alternatives. It helps the management in decision-making. It uses accounting data to solve various management problems.

Management accounting techniques like cost-volume-profit analysis, standard costing, budgetary control, capital budgeting, funds flow analysis, etc. Assist the management in arriving at the correct decision.

Motivating

Motivation means individuals need, desires, and concepts that cause him or her to act in a particular manner. Delegation serves as a motivation device because it increases the job satisfaction of employees and encourages them to look forward.

By setting goals, planning the best and economic courses of action, and also by measuring the performances of the employees, it tries to increase their efficiency and, ultimately, motivate the organization as a whole.

Controlling

Management accounting helps management in controlling the performance of the organization. Actual performance is compared with operating plans, standards, and budgets, and deviations are reported to the management so that corrective measures may be taken.

Coordinating Operations

It helps the management in controlling the performance of the organization.

Actual performance is compared with operating plans, standards, and budgets, and deviations are reported to the management so that corrective measures may be taken.

Reporting

One of the primary objectives of management accounting is to keep the management fully informed about the latest positions of the concern. The facilitates management to take proper and timely decisions.

The object of management accounting is to provide data. It presents the different alternative plans before the management in a comparative manner. The performance of various departments is also regularly communicated to the top management.

Help in Organizing

Organizing is the process of allocating and arranging human and non­human resources so that plans can be carried out successfully.

Tools or Techniques of Management

Financial Planning

A business requires finance. Financial planning involves determining both long-term and short-term financing objectives of the firm. Every firm has to decide on the sources of raising funds.

The funds can be raised either through the issue of share capital or through raising loans. Again a decision is to be taken about the type of capital, equity share capital, or preference share capital.

When it decides to raise funds through loans, management is to decide the extent of borrowing, long-term, or short term. All these decisions are important for financing planning.

Budgetary Control

There are a number of the device which help in controlling. The most widely used device for management control is “Budget.”

Budgetary control is a system that resorts to budget as a means of planning and controlling and coordinating different types of activities, like the production and distribution of goods and services as designed.

Marginal Costing

Marginal costing is helpful for the measurement of profitability of different lines of production. This technique helps in identifying the nature of costs like marginal costs (variable) and fixed costs.

This is a method of costing which is concerned with changes in costs resulting from changes in the volume of production.

Historical Cost Accounting

The statement of actual costs after they have been incurred is called Historical cost accounting.

Historical cost accounting is a system of accounting that records all transactions at costs incurred as soon as they take place or on a date immediately after their occurrence.

Decision Accounting

One of the most important functions of top management is to make decisions. Decision making involves a choice from several alternatives.

The decision is taken after studying the alternative data in terms of costs, prices, and profits furnished by management accounting and exercising the best choice after considering other non-financial factors. The objective is to maximize profit through the use of the best alternative method.

The management accounting uses Marginal Costing techniques, Capital Expenditure Budget, and separation of production costs to achieve this end.

Standard Costing

Standard costing is an important tool of cost control, which is one of the main objectives of management accounting.

Standard costing techniques compare the standard costs of materials, labor, and expenses incidental to production, which is predetermined, with the actual costs that have occurred in the course of carrying out production.

It is the most effective technique available for controlling performances and costs.

Analysis of Financial Statement

The technique of financial analysis includes comparative financial statements, ratios, fund flow statements, Cash flow statements, and comparative financial statement analysis tools to management for decision making.

The financial statements reveal the past performances of business in respect of dividend-paying capacity, nature of debts services, profit-earning capacity, and solvency position.

Based on these past events, the future course of action is projected.

Revaluation Accounting

This is an important tool for management accounting.

Revaluation or Replacement accounting revere to the maintenance of capital in real terms. This term is used to denote the methods employed for overcoming the problems connect with fixed asset replacement in a period of rising prices.

It is a fact that a problem arises in connection with the replacement of fixed assets in terms of rising prices. It ensures the maintenance of the capital of the firm.

Control 

It is not a separate accounting system. It consists of techniques of standard costing, budgetary control, control reports and statement, internal check, internal audit, and reports.

It is in this field that the management has scope to display ingenuity in the’ analysis, interpretation, and presentation of information at all levels of management.

Management Information System

It has already been stated that the management accounting of an enterprise is to provide management and other operations as a basis of protective and constructive to management.

The management accountant provides all these data and information relevant to the enterprise for the purpose.

With the development of electronic devices for recording and classifying data, reporting to management has considerably improved. Feed-back of information can be used as control techniques.

Statistical Techniques

There is a large number of statistical and graphical techniques that are used in management accounting. Some common examples are the master chart, chart of sales and earnings, investment chart, etc.

Ratio Accounting

Ratio accounting signifies the technique and methodology of analysis and interpretation of financial statements using accounting ratios derived from such statements.

Ratio accounting included trend analysis, comparative financial statements, ratio analysis, fund flow statements, etc.

Limitations of Management

Management Accounting is only a tool.

Management accounting should never be considered as an alternative or substitute for management. The tools and techniques of management accounting provide only information and not decisions.

Decisions are to be taken by management, and implementation of decisions is also done by management.

Evolutionary’ Stage

Management accounting is still in its initial stage. Management accounting is only in a developmental stage that has not reached the final stage.

The techniques and tools used by this system give varying and deferring results.

Limitations of Basic Records

Management accounting is mainly concerned with the rearrangement or modification of data. It derives its information from financing accounting, cost accounting, and other records.

The correctness of management accounting depends upon the correctness of these basic records: that is, their limitations are also the; limitations of a management accountant.

Lack of knowledge

The use of management accounting requires knowledge of several related subjects.

Deficiency in knowledge in related subjects like accounting principles statistics, economics, principles of management, etc. will limit the use of management accounting.

Persistent Efforts

The conclusions and decisions drawn by the management accountant are not executed automatically. Thus, there is a need for continuous and coordinated efforts of each management level to execute these decisions.

He has to convince people at all levels. In other words, he must be an efficient salesman in selling his ideas.

Intensive Decision

Decision making based on management accounting that provides scientific analysis of various situations will be a time-consuming one.

As such, management may avoid systematic procedures for making a decision and arrive at a decision using intuitive and intuitive limits the usefulness of management accounting.

Costly Installation

It is very costly. The installation of a management accounting system needs a very elaborate organization and numerous rules and regulations. This results in heavy investment, which only bill concerns can afford.

Personal Bias

The interpretation of financial information depends on the capacity of an interpreter as one has to make a personal judgment, personal prejudices and bias affect the objectivity of decisions.

Resistance

The installation of management accounting involves a basic change in an organizational setup.

New rules and regulations are also required to be framed, which affects many personal, and hence there is a possibility of resistance from some quarters or the other.

Top-heavy Structure

The installation of a management accounting system requires high costs on account of an elaborate organization and numerous rules and regulations. It can, therefore, be adopted only by big concerns.

Provides Only Data

The main function of management accounting is to provide data and not decisions. It can only inform, not prescribe.

Broad-Based Scope

Management accounting has a very wide scope incorporating many disciplines. Management requires information from both accounting as w£fl as non­accounting sources.

This creates many problems and brings a degree of inexactness and subjectivity in conclusion obtained through it.

Not an alternation to administration

Management accounting is a tool of management, not an alternative to management. It cannot replace the management or administration.

Opposition to Change

Management accounting demands a break away from traditional accounting practices.

It calls for a rearrangement of the personal and their activities, which is generally not like by the people involved.

Importance or Roles of Management

Efficient Planning

Management accounting plays a vital role in taking an efficient plan providing necessary information.

Through the capital budget, sales budget, Cost-volume-profit analysis, management accountants provide information for making plans.

Increasing Efficiency to Business Operations

Management accounting also plays an important role in increasing efficiency in business operations through budgeting, ratio analysis, variance analysis, standard costing, etc.

Efficient Control

Management accounting takes pan inefficient control through JIT philosophy and total quality control system.

Increase Labor Efficiency

Management accounting helps to increase labor efficiency through standard labor costing, linking bonus with productivity and budgeting.

Achieve Management Efficiency

Management accounting contributes a lot to increase the management efficiency of the organization providing managers with the correct information.

Help Management Function

We know that the main functions of management are planning, organizing, leading, and controlling management accounting helps management personnel to perform the functions properly, providing necessary accounting information.

Communicating

For performing the functions efficiently and effectively, managers need to communicate with the various parties and parts of the organization.

Management accounting helps in this respect preparing various reports.

Last of all, we can say that the activities of management accounting are occurred only to perform a vital role in the decision-making process in an organization.

Scope of Management Accounting

The main aim is to help management in its functions of planning, directing, and controlling.

The scope of management accounting is so wide broad-based that it includes within its fold an analysis of all the aspects of modern accounting, which emphasis the common denominator of the functions of both management and accounting the making of an effective decision based on appropriate information.

Financial Accounting

Financial accounting is the general accounting which accounting relates to the recording of business transactions in the books of prime entry, posting them into respective ledger accounts, balancing them preparing a trial balance.

Accounting for revenues, expenses, assets, liabilities, and net worth, together with the production of summary financial reports.

Hence management accounting can not obtain full control and coordination of operations without a well designed financial accounting system.

Cost Accounting

Costing is a branch of accounting.

Accounting for current, standard and prospective costs; analysis and communication of cost data at all levels of management with the organization. It is the process and technique of ascertaining cost. Planning, decision-making, and control are the basic managerial functions.

The cost accounting system provides the necessary tools such as standard costing, budgetary control, inventory control, marginal costing, etc. for carrying out such functions efficiently.

Budgeting Forecasting

Budgeting means expressing the plans, policies, and goals of the enterprise for a definite period in the future.

Assembly and consolidation of budget; assistance to management personnel in translating operating plans into financial budgets; reporting and analysis of budget variances.

Forecasting, on the other hand, is a prediction of what happened as a result of a given set of circumstances. Targets are set for different departments, and responsibility is fixed for achieving these targets.

Data Processing

Recording accounting data, performing repetitive operations with these data, and preparing reports to form recoded data.

Internal Auditing

Review and appraisal of accounting procedures and records to ascertain their reliability, conformity to prescribed practices, and adequacy to protect against loss of assets by fraud, waste, and other causes.

Internal audit helps the management in fixing the responsibility of different individuals.

Tax Reporting

This necessitates the computation of income by the Income Tax Act, preparing return statements and making payment of taxes when due Income statements are prepared, and tax liabilities are calculated.

The management is informed about the tax burden from the central Government, State Government, and Local Authorities. This includes the computation of taxable income as per tax law, filing of returns, etc.

Financial Analysis

Interpretation of accounting reports, analysis in financial terms of proposed projects, plans, and procedures; assistance to the management in interpretation and evaluation of financial data of all types.

Inventory Control

It includes control over inventory from the time it is acquired until its final disposal.

Revaluation Accounting

This is concerned with ensuring that capital is maintained intact in real terms, and profit is calculated with this fact in mind.

Statistical Methods

Graphs, charts, pictorial presentations, index numbers, and other statistical methods make the information more impressive and intelligible.

Other tools, such as time series, regression analysis, sampling technique, etc. are highly useful for planning and forecasting.

Taxation

This includes the computation of income following the tax laws, filing of returns, and making tax payments.

Method and Procedures

This includes maintenance of proper data processing and other office management services, reporting on the best use of mechanical and electronic devices.

It provides statistical data to the various departments and undertakes special cost studies, cost estimations, reports on cost-volume-profit relationships, under the changing conditions of the organization.

Interim Reporting

This includes the preparation of monthly, quarterly, half-yearly income statements and the related reports, cash flow and funds flow statements, scrap reports, etc.

Office Services

This includes maintenance of proper data processing and other data processing and other office management services, reporting on the best use of mechanical and electronic devices.

Other Services

This includes maintenance of proper data processing and other office management services, reporting on the best use of mechanical and electronic devices.

Ethical Responsibilities of Management

Management accountants should behave ethically. They must follow the highest standards of ethical responsibility and maintain a good professional image.

Competence

Maintain an appropriate level of professional competence through the ongoing development of their knowledge and skills.

Perform their professional duties following relevant laws, regulations, and technical standards.

Prepare complete and clear reports and recommendations after appropriate analyses of relevant and reliable information.

Confidentiality

Refrain from disclosing confidential information acquired in the course of their work except when authorized, unless legally obligated to do so.

Inform subordinates as appropriate regarding the confidentiality of information acquired in the course of their work and monitor their activities to assure the maintenance of that confidentiality.

Refrain from using or appearing to use confidential information acquired in the course of their work for unethical or illegal advantage either personally or through third parties.

Integrity

Avoid actual or apparent conflicts of interest and advise all appropriate parties of a potential conflict.

Refrain from engaging in any activity that would prejudice their ability to carry out their duties ethically.

Refuse any gift, favor, or hospitality that would influence or would appear to influence their actions.

Refrain from either actively or passively subverting the attainment of the organization s legitimate and ethical objectives.

Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

Communicate unfavorable as well as favorable information and professional judgments or opinions.

Refrain from engaging in or supporting any activity that would discredit the profession.

Credibility

Communicate information fairly and objectively.

Disclose fully all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, comments, and recommendations presented.

Services/Tasks of Management

Listed below are the primary tasks/services performed by management accountants. The degree of complexity relative to these activities are dependent on the experience level and abilities of any one individual.

Managerial consultancy

Financial report analysis

Cost analysis

Rate and volume analysis

Business metrics development

Price modeling

Product profitability

Geographic vs. industry or client segment reporting

Sales management scorecards

Cost-benefit analysis

Cost-volume-profit analysis

Life cycle cost analysis

Client profitability analysis

IT cost transparency

Capital budgeting

Buy vs. lease analysis

Strategic planning

Strategic management advice

Internal financial report presentation and communication

Sales forecasting

Financial forecasting

Annual budgeting

Cost allocation

Managerial decision making

Information

Information is stimuli that has meaning in some context for its receiver. When information is entered into and stored in a computer, it is generally referred to as data.

After processing -- such as formatting and printing -- output data can again be perceived as information. When information is compiled or used to better understand something or to do something, it becomes knowledge.

The data-information-knowledge-wisdom model illustrates this hierarchy. Structured as a pyramid, the model was created to show that data can be captured in different formats, analyzed and converted into different forms. Each level of the pyramid represents a different perspective or level of abstraction as follows:

• The discrete, raw facts about a given situation with no analysis or interpretation applied.
• Applying description and meaning to data to make it useful.
• Information that has insight, context and a frame of reference applied so it can be interpreted.
• Knowledge is converted into wisdom by applying judgment and action to the information.

What is data?

Data refers to the raw information. In the context of information technology (IT) and computing, it is information that a software application collects and records. Data is typically stored in a database and includes the fields, records and other information that make up the database. It can be accessed and manipulated digitally, and it is quick and easy to transfer among computers.

Data is collected from a variety of sources, such as computers, sensors and devices. It is typically used in business, science and engineering. Data is often presented in the form of numbers, but it can also come as text, visuals, graphics and sounds. Data can also be analyzed and used to create information that could not be obtained by just looking at the original data.

The most common types of data in data science are the following:

Quantitative data is numerical data, or data that can be expressed mathematically. Discreet and continuous data are types of quantitative data.

Qualitative data is data that cannot be measured, counted or easily expressed with numbers. It is data that comes from text, audio or images. It can be shared using data visualization tools, such as timelines, infographics and word clouds.

Nominal data is the simplest form of data in statistics. It is data that is used to name or label a variable; it isn't used to measure things or put them in any order. Examples of nominal data include ethnicity, gender, eye color.

Ordinal data is data that takes on values within a known range and follows a natural order. A common example of ordinal data is income levels where incomes are ranked in specific ranges, such as $0-$50K, $50K-$75K, $75K-$100K, etc. The purpose of ordinal data is to rank items in order of priority or value. The numbers are not used for calculations.

Discrete data, also called categorical data, is data that is divided into discrete categories, or groups, that are distinctly different from each other. With discrete data, only a specific number of values are possible, and those values cannot be subdivided. For example, the number of people a company employs is a discrete data point.

Continuous data is a term used to describe data that is measurable and observable in real time. It can be measured on a scale or a continuum and subdivided into finer values. Continuous data is often recorded at set intervals and then analyzed using statistical software. The amount of time it takes to complete a task is an example of continuous data.

What is the data processing cycle? 

The data processing cycle is the framework that data center managers use to make data accessible and useful to users. It is a portion of the data lifecycle. Data enters the data center where it is processed, and then it is sent to the user who makes use of it in a business application.

The part of the data lifecycle referred to as the data processing cycle is divided into the following three stages:

• This is the stage where data is collected from multiple sources - point-of-sale locations, call centers and sensors, for example.
• The data is sorted, organized, cleansed and entered into a database or system. It is then transformed into a format that users can understand and make use of.
• The newly processed and transformed data is sent to users or stored in a way that they will have access to it when needed.

What is the data processing cycle?

The data processing cycle is the framework that data center managers use to make data accessible and useful to users. It is a portion of the data lifecycle. Data enters the data center where it is processed, and then it is sent to the user who makes use of it in a business application.

The part of the data lifecycle referred to as the data processing cycle is divided into the following three stages:

• This is the stage where data is collected from multiple sources -- point-of-sale locations, call centers and sensors, for example.
• The data is sorted, organized, cleansed and entered into a database or system. It is then transformed into a format that users can understand and make use of.
• The newly processed and transformed data is sent to users or stored in a way that they will have access to it when needed.

Converting data to information

Data and information are not the same. Data refers to numerical and qualitative observations. Information is created when data is presented in a way that has meaning to the recipient. To turn data into information, it must be processed and organized. Presenting data in a way that has meaning and value is called information design, and it is an important field in both Information architecture and human-computer interaction.

Five characteristics of data quality and high-quality information in a database include the following:

• Information must come from a reliable source of information.
• Information cannot be partial or have details missing.
• Mechanisms must be in place to ensure that new data doesn't contradict existing data.
• Information must be distinctive and add value to a database.
• Information in a database must be timely and up to date.

Converting information to knowledge and wisdom

Knowledge is information that has been processed, analyzed and interpreted, and can be used to make decisions. The concept of knowledge involves not just the information, but the ability to access it, as well. For example, most applications, including models and simulations, include a form of stored knowledge.

Wisdom is the synthesis of information, knowledge and experience in a way that applies knowledge to real-life situations. The concept of wisdom enables the understanding of patterns and their driving factors. It ultimately enables the prediction of future events.

Artificial intelligence (AI) has enabled computers to learn, problem-solve and perform tasks that usually require human intelligence. These technologies enable computers to take actions based on what the data provided indicates is the best course of action. AI is used in expert systems to diagnose disease, buy and sell stock and play chess better than a human. However, IT has not yet attained a level of human wisdom.

System

A system is a collection of elements or components that are organized for a common purpose. The word sometimes describes the organization or plan itself (and is similar in meaning to method, as in "I have my own little system") and sometimes describes the parts in the system (as in "computer system").

A computer system consists of hardware components that have been carefully chosen so that they work well together and software components or programs that run in the computer.

The main software component is itself an operating system that manages and provides services to other programs that can be run in the computer.

A filing system is a group of files organized with a plan (for example, alphabetical by customer).

All of nature and the universe can be said to be a system. We've coined a word, ecosystem, for the systems on Earth that affect life systems.

The term can be very useful because so many things can be described as systems. It can also be very unuseful when a more specific term is needed.