Scope of management accounting is very vast and includes various aspects of the business activities. Management accounting has its scope in the following fields or systems:
1. Financial accounting :- It is the foremost and indispensable part of accounting. In this system, business transactions of financial character are recorded in the proper subsidiary book. Posting of these transactions is done in ledger and from this the final accounts are prepared. Final accounts include profit and loss account and balance sheet. Profit and loss account represents the profit/loss earned during the accounting period and the balance sheet represents the financial position of a company as on a particular date. Financial accounting is the foundation from management accounting as it provides the necessary information for prepration of details and reports to be presented to the management.
2. Cost Accounting :- Cost accounting is one of the important branches of accounting. It ascertains the cost of producing a particular commodity and rendering of services cost of selling and distribution. It facilitates effective planning regarding commodities, proper decision-making and cost control. Some of the important tools of cost accounting are marginal costing, standard costing and budgetary control.
3. Revaluation accounting :- Revaluation accounting ensures that capital is represented at its real value in the accounts and the profit has been calculated keeping this fact in mind. In other words, it assures that the assets are revalued according to the need and its effect has been brought into the accounts. Management accounting helps to ascertain the revalued figures of the assets.
4. Control accounting :- Controlling means to measure the variation, if any, between actual and the standard results and taking corrective measures to remove that variation. Management
1. Financial accounting :- It is the foremost and indispensable part of accounting. In this system, business transactions of financial character are recorded in the proper subsidiary book. Posting of these transactions is done in ledger and from this the final accounts are prepared. Final accounts include profit and loss account and balance sheet. Profit and loss account represents the profit/loss earned during the accounting period and the balance sheet represents the financial position of a company as on a particular date. Financial accounting is the foundation from management accounting as it provides the necessary information for prepration of details and reports to be presented to the management.
2. Cost Accounting :- Cost accounting is one of the important branches of accounting. It ascertains the cost of producing a particular commodity and rendering of services cost of selling and distribution. It facilitates effective planning regarding commodities, proper decision-making and cost control. Some of the important tools of cost accounting are marginal costing, standard costing and budgetary control.
3. Revaluation accounting :- Revaluation accounting ensures that capital is represented at its real value in the accounts and the profit has been calculated keeping this fact in mind. In other words, it assures that the assets are revalued according to the need and its effect has been brought into the accounts. Management accounting helps to ascertain the revalued figures of the assets.
4. Control accounting :- Controlling means to measure the variation, if any, between actual and the standard results and taking corrective measures to remove that variation. Management
