• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

"If management accountants are to remain useful to the organisations within they work, they need to keep current with changes in management practices" (Horngern, 2002) Management accounting was evolved from financial accounting in the 19th century

Extracts from this document...

Introduction

"If management accountants are to remain useful to the organisations within they work, they need to keep current with changes in management practices" (Horngern, 2002) Management accounting was evolved from financial accounting in the 19th century, due to the escalated need for more detailed and timelier information for stock control, product costing and decisions affecting the future. The main aim of it was to "provide timely and accurate information which can help create value" (Atkinson et al). I am going to investigate how management accounting has developed over time and whether it still provides a useful tool to managers. Accounting is now facing new challenges, "business people must increasingly recognise that the challenge now is to help to deliver simultaneously economic prosperity, environmental quality and social equity" (Elkington, 1998), which is causing mangers to re-evaluate the practises that are currently conducted. Traditionally management accounting systems were concerned with providing financial information. However in respond to the changing environment an immense emphasis is now on gathering and reporting non-financial quantitative and qualitative information. This resulted in a movement; treating financial figures as part of a broader set of measures instead of foundations of the practise. In the 1950's efforts were made to calculate the total costs involved in producing one unit of X. ...read more.

Middle

This lead to the development of the ABC system which uses many cost drivers unlike the traditional method that only use one or two, as a result the ABC method increase product-costing accuracy. In the eighteenth century the industrial revolution displayed a challenge for producing accounting as a tool for industrial management. The practise of using accounting information to help mangers was not successful; however Josiah Wedgwood constructed costing techniques as guide to management decisions. This new role of management accounting was implemented in the twentieth century Management accounting has been considered to develop slowly since the 1980's. It has been difficult for managers to use the information given by their company effectively due to management systems being at a primitive stage. Johnson and Kaplan came to conclusion that systems are not supply right information to managers. The product life cycle has been shortened as a consequence of intensive global competition, new technology and customer demand. For organisations to be successful they now need to introduce products first and speed up the rate of manufacturing. This produced the need for management accounting; in order for organisation to be able manage their costs effectively at the design stage and have the ability to adapt to new, different and changing customer requirements. ...read more.

Conclusion

The development of Management accounting has evolved as the business environments have dramatically changed. The change in social perspectives and development information and manufacturing technology and international competition has affected the accounting profession dramatically hence policies need to be reconsidered. Management accounting has contributed to the success in expanding the size of production and increasing standards of living. Now organisations are looking from a strategic perspective, considering external factors in its decision making. Social importance has taken an important role. Accounting is slowly moving away from a traditional approach towards a social and 'green accounting'. In the late 1980 and early 1990's experienced changing cost mechanisms, as it was hard to trace accurately to products and services. Companies now are competing in a global market in the sense of quality, after-sales and customer satisfaction. Until recently management accounts have not taken these points into account and have focused more towards reporting the financial aspects. Management accounting needs to identify opportunities and threats in the near future so that carefull planning can account for this and prevent any unexpected events arising. It has been criticised for concentrating too narrow and inwards. It should widen its scope and take information on the environment in which it operates and on it competitors into account. The changing practices extend the limits of accounting but at the same time problems are created in defining the scope of the subject. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Marked by a teacher

    effective cashflow management

    4 star(s)

    immediately and put business back on the right track to a positive cash flow. BENEFITS OF BUDGETING * Planning can be easily linked to management decisions * Managers can be made responsible for budgets * Budgets encourages co-operation and co-ordination * Outcomes can be compared to budgets * Sets standards

  2. Discuss the Need for Regulation in Financial Reporting

    of comparability by reducing the number of acceptable, alternative accounting methods; help reduce the influence of personal biases and political pressures on accounting judgements; reduce the costs of analysis and the effort involved in resolving accounting problems; increasing the level of user confidence in, and understanding of, financial reporting by

  1. Discuss the need for regulation in financial reporting.

    Thus, the financial reports of stallholder are subject to far fewer rules than are those of a public limited company. * Who are the regulators who determine the form and content of published accounts, and how do they arrive at their decisions?

  2. Unit 5 Introduction to Accounting

    should need to bring some money to increase the amount of capital available. Shares A unit of ownership interest in a corporation or financial asset. While owning shares in a business does not mean that the shareholder has direct control over the business's day-to-day operations, being a shareholder does entitle

  1. The Purpose of Keeping Accurate Accounts

    Such circumstances as the state of the market and the availability of finance are important considerations here Accruals concept The accruals concept is also known as matching concepts, it states that revenue and costs must be recognised as they are earned or incurred, not as money is received or paid.

  2. Management Accounting Report.

    to make and the reason for this is that he has no in depth information about the manufacturer. If the managing director decides to go ahead with his idea then the company is going to be in a serious trouble.

  1. International Accounting Standarts

    prescriptions: All sole proprietorship and limited companies (� 238 Abs.1 S.1 und 2 HGB), as well as corporate enterprises (� 264 Abs.2 S.1 HGB) are bounded to balance their accounts in a way, a third person will be able the get a view that matches the real status of financial and assets items.

  2. The role of a conceptual framework

    Mangers also use the information provided in the conceptual framework because it allows them to predict future outcomes like budgeting, planning and forecasting. It also allows them to see where most money is spent on like things like machinery etc and are they being used effective or not.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work