Management Accounting Essay Example | Topics and Well Written Essays - 2000 words - 1

Management Accounting - Essay Example Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies, and tax authorities." (Riahi-Belkaoui, 1992) It was against a backdrop of an increase in industrial production in the 19th century and throughout the middle of the 20th century that managers saw the importance of cost accounting following a tremendous increase in investment in factories, natural resources and equipment. (Freitas, 2002). During this era managerial accounting and cost accounting had no clear distinction as managerial accounting was often taken to mean the same thing as cost accounting. (Freitas, 2002). Managerial accounting began shifting focus from cost accounting sometime around the 1960s as a result of the growth of the service industry and the rapid growth of financial institutions, which brought about a change in the accounting environment. (Freitas, 2002). In addition, this era also saw the emergence of the idea of human resource accounting as well as a significant change in the area of managerial accounting research. ... (Freitas, 2002). There were however difficulties with this accounting as it were difficult to decide how to provide a value to the human resources. (Freitas, 2002). Firstly, they needed a method to account for human resources; secondly there was the need for a model and concepts for measuring the costs and value of people as organisational resources. Thirdly, there was the need for experiments to apply the approach in an actual organisation; this was difficult as organisations were not willing to serve as sites for the experiments. (Freitas, 2002). And the fourth and last stage was to test empirically, human resource accounting information in a behavioural context. And the 5th stage like the 3rd one needed additional experiments to apply human resource accounting technologies to a variety of managerial problems. (Freitas, 2002). Most of what is known today as Management accounting such as standard costs, overhead rates, opportunity cost and profit centres were referred to as costs accounting and not management accounting. Also Management Accounting was not included in the School Curriculum of many schools. (Cunha, 2002). Introduction of management accounting as a course highlighted two important differences from cost accounting. Firstly, management accounting took into consideration the fact that the end numbers were used by people for decision-making and therefore took into consideration how such information could influence their behaviour and thus the idea of behavioural accounting. (Cunha, 2002). Secondly cost accounting was too much concerned with full costing (finding the true cost) while management accounting considered a wide range of topics. (Cunha, 2002). Management accounting has gained a lot of recognition as