Management Accounting: a Critical Aid to the Decision Making Process Essay Example
Is management accounting a critical aid to the Decision Making Process in an organization? The answer undoubtedly is in the affirmative. During the past few decades, management accounting practices were conducted across a range of industries in the world. Management accounting can be viewed as a powerful tool for management. However, a widespread misconception exits that management accounting is an aid omnipotent. Therefore, this essay will focus on investigating the role of management accounting in the Decision Making Process (how it can help managers to make better decisions). It will firstly give a definition of management accounting by comparing with financial accounting and my own evaluation of management accounting, and then will go on to describe the development and history of management accounting in the United Kingdom. After that, it will discuss the functions of a manager and how management accountants can help to support these functions with a number of numerical examples. Next, a further discussion about the importance of good decision making, the consequences of poor decisions and the critical factors in making a wise decision based on these examples will be conducted. At the final part of this essay, it will contain a conclusion.
Kaplan and Atkinson (1989) stated that ‘Management accounting is the process of collecting, classifying, processing, analysing and reporting information to managers to allow them to take efficient and effective management decisions’. Thus, management accounting could be referred as internal accounting which is concerned with the provision of information to those internal users within the organization, like managers to help them make better decisions and improve the efficiency and effectiveness of existing operations (Drury 2006, p.7). It is quite different from financial accounting which focuses on providing information to external parties outside the organization. In fact, management accounting differs from financial
Kaplan and Atkinson (1989) stated that ‘Management accounting is the process of collecting, classifying, processing, analysing and reporting information to managers to allow them to take efficient and effective management decisions’. Thus, management accounting could be referred as internal accounting which is concerned with the provision of information to those internal users within the organization, like managers to help them make better decisions and improve the efficiency and effectiveness of existing operations (Drury 2006, p.7). It is quite different from financial accounting which focuses on providing information to external parties outside the organization. In fact, management accounting differs from financial