Define Management accounting. Explain the rule of management accounting for a Banker

 Management accounting:

Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

 According to the Chartered Institute of Management Accountants (LIMA), Management Accounting is "The process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises tine preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities".

 The Institute of Management Accountants (IMA) recently updated its definition as i()llows: "Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy". Management accounting information is:

·      Primarily forward-looking, instead of historical;

•      Model based with a degree of abstraction to support decision making generically. instead of case based;

•    Designed and intended for use by managers within the organization, instead of being intended for use by shareholders, creditors, and public regulators:

·      Usually confidential and used by management, instead of publicly reported:

•    Computed by reference to the needs of managers, often using management information systems, instead of by reference to general financial accounting standards.

 .Role of Management Accounting are as:

 •      Breaking down of cost/expenditure into functions and processes to facilitate cost control at each operational level.

•     Developing standards for all operating areas and evaluating actuals with the standards.

·     Analyzing business and operational data.

·     Suggesting alternatives to improve productivity.

·     Identifying areas of wastages, leakages and inefficiencies or invisible losses.

·     Ensuring optimum utilization of available resources.

·     Deploying informatic tools for a management information system.

·     Contributing to Total Quality Management (TQM).

·      Assisting in decision-making process.

Management accounting tasks/ services provided:

Listed below are the primary tasks/ services performed by management accountants. The degree of complexity relative to these activities is dependent on the experience level and abilities of any one individual.

·         Rate and volume analysis

·         Business metrics development

·         Price modeling

·        Product profitability

·        Geographic vs. Industry or client segment reporting

·        Sales management scorecards

·        Cost analysis

·        Cost-benefit analysis

·        Cost-volume-profit analysis

·        Life cycle cost analysis

·        Client profitability analysis

·        IT cost transparency

·        Capital budgeting

·        Buy vs. lease analysis

·        Strategic planning

·        Strategic management advice, Internal financial

presentation and communication, Sales forecasting, Financial forecasting, Annual budgeting, Cost allocation

 Methods

1.Activity-based costing, 2.Grenzplankostenrechnung (GPK), 3.Lean accounting,

4.Resource Consumption Accounting

5.Standard costing,