Page 171 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes Cost accounting became closer to management needs. As time passed by, cost
accounting absorbed many decision-making techniques from other branches and became
comprehensive.

Cost finding became one of the many functions. This led to a separate branch called
management accounting.
Management accounting is based on the past or yesteryear information of cost accounting

and financial accounting which influences the effectiveness of the entire management
accounting.
The cost accounting is very closely-related to fi nancial accounting.
Few authorities of accounting consider cost accounting to be the branch of fi nancial
accounting.
The fundamental principles of double entry system are applicable in fi nancial accounting
as well as cost accounting.

9.6 Keywords

Cost Accounting: This helps management to conduct performance appraisal and also facilitates
in formulating price policies.
Financial Accounting: Financial accounting is a traditional method of accounting that supplies

historical information about the firm during the past.
Management Accounting: Management accounting provides necessary information to assist the
management in the creation of policy and in the day-to-day operations.

9.7 Review Questions

1. List out the objectives of management accounting.
2. Elucidate the various functions of management accounting.
3. Write brief notes on the scope of management accounting.
4. Distinguish between the management accounting and cost accounting.

5. List out the contradictory areas of interest in between management accounting and fi nancial
accounting.
6. Management accounting is the accounting system for making decisions of the business
enterprise. Discuss.
7. “Management accounting serves as a tool to management.” Analyze this statement.
8. Analysis the scope of management accounting.
9. Write briefly of the evaluation of management accounting.

10. The cost accounting is very closely-related to financial accounting. Give some suggestions
to support the above statement.
Answers: Self Assessment

1. Management accounting 2. management
3. Financial Accounting 4. Operations Research

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