1. Planning Information and date provided by management accounting helps management to forecast and prepare short-term and long term plans for the future activities of the business and formulate corporate strategy. For this purpose management accounting techniques like budgeting, standard costing, marginal costing.0. Coordinating: Management accounting techniques of planning also help in coordinating various business activities. For example, while preparing budgets for various departments like production, sales, purchases, etc., there should be full coordination so that there is no contradiction. By proper financial reporting, management accounting helps in achieving coordination in various business activities and accomplishing the set goals.1. Controlling: Controlling is a very important function of management and management accounting helps in controlling performance by control techniques such as standard costing, budgetary control, control rations, internal audit, etc.0. Communication: Management accounting system prepares reports for presentation to various levels of management which show the performance of various sections of the business. Such communication in the form of reports to various levels of management helps to exercise effective control on various business activates and successfully running the business.0. Financial analysis and interpretation: In order to make accounting data easily understandable, the management accounting offers various techniques of analyzing, interpreting and presenting this data in non-accounting language so that every one in organization understands it. Ratio analysis, cash flow and funds flow statements trend analysis, etc., are some of the management accounting techniques which may be used for financial analysis and interpretation.0. Qualitative information: Apart from monetary and quantitative data, management accounting provides qualitative information which helps in taking better decisions. Quality of goods, customers and employees, legal judgments, opinion polls, logic, et, are some of the expels of qualitative information supplied and used by the management accounting system for better management.0. Tax policies: Management accounting system is responsible for tax policies and procedures and supervises and coordinates the reports prepared by various authorities.0. Decision making: Correct decision making is crucial to the success of a business. Management accounting has certain special techniques which help management in short team and long term decisions. For example, techniques like marginal costing, differential costing, discounted cash flow, etc., help in decisions such as pricing of products, make or buy, discontinuance of a product line, capital expenditure, etc

Limitations of Management Accounting1. It is based on Financial Accounting:Whatever information the management according gets, They are of the financial accuracy of the management decisions is based on the correctness of these information. If financial data is not reliable then management accounting will not provide correct analysis. this effectiveness limited to the reliability of those sources.2. Lack of knowledge:For taking a sound decision it is necessary that the management must have knowledge of various fields like accounting, statistics, economics, taxation, production, engineering and so on. But it has been observed that the person who is taking the decision may not have comprehensive knowledge of all such subjects.

3. Lack of continuity and Co-ordination:In order to make the conclusions drawn by management accountant meaningful, they must be implemented in the organisation at various levels. But in actual practice they loose their significance because it is not feasible to implement such conclusions.4. Lack of objectivity:There are every possibility of personal bias and manipulations from the collection of data to the interpretation stage in financial accounting. Thus, it looses objectivity and validity.5. Costly:The Installment of management accounting system in a concern requires large organisation and a wide net work of rules and regulations and thus requires a heavy investment.6. Evolutionary Stage:The management accounting is in a recent origin and still in an evolutionary stage. New theories and new techniques are being introduced every now and then. Thus, Essential to keep a continuous track for the latest theories and their application.7. Effect of time element:The information received in management accounting are all past and by the time the information and statistics are introduced. The situations are all changed and this condition puts the organisation in difficulties.

Financial Accounting Vs Management AccountingAudienceFinancial Accounting

Financial accounting produces information that is used by external parties, such as shareholders and lenders.Management Accounting

Managerial accounting produces information that is used within an organization, by managers and employees.

ObjectivesThe main objectives of financial accounting are to disclose the end results of the business, and the financial condition of the business on a particular date.The main objective of managerial accounting is to help management by providing information that is used to plan, set goals and evaluate these goals.

Optional?It is legally required to prepare financial accounting reports and share them with investors.Managerial accounting reports are not legally required.

Segment reportingPertains to the entire organization. Certain figures may be broken out for materially significant business units.Pertains to individual departments in addition to the entire organization.

FocusFinancial accounting focuses on history; reports on the prior quarter or year.Managerial accounting focuses on the present and forecasts for the future.

FormatFinancial accounts are reported in a specific format, so that different organizations can be easily compared.Format is informal and is on a per department/company basis as needed.

RulesRules in financial accounting are prescribed by standards such as GAAP or IFRS. There are legal requirements for companies to follow financial accounting standards.Managerial accounting reports are only used internally within the organization; so they are not subject to the legal requirements that financial accounts are.

Reporting frequency and durationDefined - annually, semi-annually, quarterly, yearly.As needed - daily, weekly, monthly.

InformationMonetary, verifiable information.Monetary and company goal driven information.

Cost Accounting Vs Management Accounting