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Need and importance of Management Accounting 

Need and importance of Management Accounting 

Need and importance of Management Accounting 

The main advantages of management accounting are discussed.

  1. Determination of Aim:

    Management accounting on the basis of the information available determines its goal and tries to find out the route through which it can reach the goal.

  2. Helpful in the Preparation of Plan:

    Present age is the age of planning. That producer is considered as most successful producer who produces articles according to the plan and needs of the consumers. Before taking any plan the manager must study and analyze the present and future of the business.

  3. Easy to take Judgement:

    Before taking any plan or to determine policy, there are several plans or policies before the management and on the basis of their study he decides which plan or policy to be adopted so that it may be more useful and helpful.

  4. It increases efficiency of the business:

    Management accounting increases efficiency of the business concern. The targets of different departments of the enterprise are determined in advance and achievement of these goals is taken as a tool for measuring their efficiency.

  5. Better Service to Customers:

    The cost control devices used in the management accounting enables the reduction in prices. All employees in the concern are made cost conscious. The quality of products becomes good because quality standards are pre-determined. The customers are supplied goods of good quality at reasonable prices.

  6. Measurements of Performance:

    The technique of budgetary control and standard costing enables the measurement of performance. In standard costing, standards are determined first and then actual cost is compared with standard cost. It enables the management to find out deviations between standard cost and actual cost. The performance will be good if actual cost does not exceed the standard cost. Budgetary control system too helps in measuring efficiency of all employees.

  7. Maximum Profits can be obtained:

    In this process every possible efforts are made to control unnecessary expenses. The incapability or inefficiency is removed. New systems or techniques are found out to achieve the goal, so that there may be maximum profit out of the capital invested in the business.

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