accounting methodology to fulfill the goals of an organization in a regimented process by
developing strategy, building the necessary resources, and finally implementing the
strategy. The procedure involves applying techniques (subject to accounting standards) to
determine and differentiate information that helps determine the strategic path designed
to accomplish the organizational objectives. However beyond the periphery accountancy
is divided into two major branches, “Financial” accounting, “Management” accounting,
and these are further subdivided. Like the name suggests financial accounting focuses on
reporting to external parties, measuring and recording business transactions and preparing
financial statements. Similarly management accounting deals with financial and non-
financial information, measuring it and applying it toward achieving the company aims.
Organizations are defined by accounting; from public down to sole ownership, it is
central in giving the business its identity. The bookkeeping, forms the initial stage, or in
other words is the keeping of the day to day records that are used to prepare financial
reports. The methodology accounting is a detailed process which summarizes the
organization’s progress, both financially and growth wise, in the form of statements,
which are used as analytical tools by the external parties. Accountancy shapes the image
of an organization and thus plays a crucial role in its development.
Accounting in organizations calculates organizational performance for decision-making,
coordination and motivation using techniques such as cost allocation, responsibility
centers, transfer prices, product costing, performance measurement and budgeting. All
are expected to contribute to increased firms value (Hopper, Northcott and Scapens 2007,
is concerned with the provisions and use of accounting
information to managers within organizations, to provide them with the basis in making
informed business decisions that would allow them to be better equipped in their
management and control functions. Unlike financial accountancy information (which, for
public companies, is public information), management accounting information is used
within an organization typically for decision-making and is usually confidential and its
access available only to a select a few (Management Accounting 2007 online).
The role of management accounting in organizations is to provide assistance in planning,
controlling, organizing, motivating and decision making.
Assistance in planning
The management accountant assists planning by providing information. This information
may be about pricing, capital expenditure projects, product costs or competition. In the
short-term planning process of budgeting, the management accountant provides
information on past costs and revenues which may be used as guidance. The management
accountant is also involved in the budgeting process itself.
Assistance in controlling