>> March 24, 2011
Management accounting is needed in business because it has capacity to change the business performance and financial position. Please pay attention to the advantages of management accounting.
1st : Increase Efficiency :
Management accounting increases the efficiency of operation of company. Everything is done in management accounting with a scientific system for evaluating and comparing the performance. With this, we find deviations. We will take promotional decisions on this basis. Other employees will also be motivated with this because if their performance will be favourable, they get reward of this. Thus management accounting increases efficiency.
2nd : Maximizing the Profitability :
Using of management accounting's budgetary control and capital budgeting tool, company can easily succeed to reduce both operating and capital expenditures. After this, company can reduce its price and then company will receive super profits.
3rd : Simplify the Financial Statements
For taking different managerial decisions, management accountant provides deep technical reports with simple interpretations in which he mentions the facts of financial statements, after this, company's management officers understand what is in financial statement and how will they use this for company's progress.
4th : Control of Business's Cash Flow :
It is one of important advantage of management accounting that it can be used for controlling of business's cash flow. We all know that cash in hand is better than in fixed properties if there is emergency to pay our loan or debt. So, management accountant deeply studies from where is money coming and where is it going. To check on misuse of money will surely control of business's cash flow.
5th : Business-critical Decisions
To take business - critical decisions, now management accounting will become more powerful. Global management accountants are coming for join on one plate-form for taking all business critical decisions.
Its example, we can see in the form of new joint venture of USA and UK certified management accounting bodies. Link
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