Page 170 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 9: Introduction to Management Accounting

5. Accuracy of results It has to ensure the accuracy It need not, instead it is mainly Notes
forever. for internal use depends upon
approximation.
6. Legal responsibility Compulsory for joint stock It is not compulsory but
companies – Accounting period optional.
concept.
7. Limitation on It provides room only for the It considers both monetary and
transactions monetary transactions. non- monetary transactions at
a time together—Qualitative
changes are considered.
8. Exercise the path of Being the contributory of past It is able to highlight the
control information; not able to monitor deviations of the actual from
the plans properly. the plans and earmark the
reasons for the deviations.

Task Prepare the proforma of key fi nancial statements prepared under fi nancial
accounting and cost accounting.

Self Assessment

Fill in the blanks:
8. The fundamental principles of ........................ are applicable in financial accounting as well

as cost accounting.
9. ........................ deals with detailed analysis of performance of each and every department of
the organisation.
10. Main purpose of ........................ is to ascertain the cost.
11. ........................ uses only quantitative information pertaining to the transactions.
12. The causes for losses and wastages of a business or industry are provided by ........................
and cost accounting.
13. Few authorities of accounting consider cost accounting to be the branch of ........................
accounting.
14. The major objective of ........................ is to make decisions through supplement presentation
of accounting information.
15. The key objective of ........................ is to supply information about the enterprise through
P&L A/c and balance sheet to outside parties.

9.5 Summary

Management accounting today is a branch of accounting.

The two major dominant forces of management accounting are financial accounting and
cost accounting.

Financial accounting was found efficient for management decision-making because it
reported the state of affairs of the company as a whole posthumously.
This was all right for the owners and other outsiders. But when management got
divested from ownership and the survival of management depended on their competitive
performance, financial accounting was found inadequate.

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