Importance Of Management Accounting

Management accounting is a method of identification, measurement, analysis, preparation and communication of information. It is utilized by management to evaluate, plan and control an entity. The primary purpose of management accounting is to provide information useful for management decisions significantly on planning and control purposes. Management accounting is concern with useful information to managers or someone in an organization who control the entity. Management accounting can play an important role in making organization become successful because it is a method that can be used to analyse a company’s financial information. Management accounting also helps in planning for future needs and goals of the business. Then it is a must for

The disclosure of management accounting practices such as balanced score card, activity based costing (ABC), target costing and strategic management accounting practices is the results of growing adaptation on modern management practices by today’s organizations. The results of growing adaptation are total quality management, supply chain management, Lean manufacturing and Just In time (JIT). The introduction of management accounting practice is to increase efficiency and business performances of a company. Even though management accounting practices implementation is often recognized to be more beneficial for larger organizations due to the nature of their complex operations. The usefulness of management accounting practices in small and medium-sized enterprises should not be ignored. Management accounting practices implementation is important to sustain the competitiveness level of business. It is important for small and medium size enterprises to consider the adaptation of proper management accounting practices. It is because it will sustain their business in the long-term. A larger business will need a more advanced system to allow them to make frequent decisions on the prices and costs of their products. On the other hand, a smaller firm may only need a basic budget and some standard cost figures for their more infrequent pricing and cost decisions mainly for planning and control. This or any system should be easy to use, understand, maintain and it should be flexible and cost effective. The study found that the financial performance of respondents using the reports for decision-making purposes was crucially better than those who did not use the reports. Planning formalization has a positive and highly significant impact on the probability of belonging to a group of growth