In management, a company will inevitably encounter all sorts of problems. Among them is wasteful and business activities that do not give the value of the benefits that can not produce the maximum profit. To resolve the problem, the company management needs to acquire a system of effective and adequate reporting. So that problems that occur allows to be resolved soon. It is included as a form of control of the company.
Before performing the control, management companies need to make a plan of its business. In order for the various activities of the company can occur effectively in time and cost of producing goods and services. The effectiveness of the function in order to make the company competitive in the business world. Therefore, management companies need to obtain some information that reflects the consumption of economic resources. Management accounting is the right system for it because it is designed to meet the needs of enterprise management in planning and controlling the activities of the company to achieve its intended purpose.
So what is a management accounting as well as any benefits to managers and companies? Here we discuss the explanation.
Definition of Management Accounting
Management accounting is the process of financial transaction processing, identifying, measuring, analyzing, and presenting it in the form of information used by company management in planning, control, evaluation of activities as well as to ensure the effectiveness of business activities in the use of economic resources company and accountability.
Benefits management accounting for the company’s managers are as follows:
- Assist in the preparation of effective planning
The main benefits of management accounting for managers is to assist in the planning of business enterprise programs. This plan also called budgeting. Because in any business program would require the estimated funds needed for these activities can be run well and smoothly. So every plan made business program must include the following funds budget estimates. Generally, the budget prepared annual period. But the budget period can be different from one company to another company, because it depends on the policy of each company.
- Assist the process of monitoring and control
Assist the process of supervision and control over planning irregularities that may occur. In the management of a business, the aberrations may occur, such as improper operational standards, businesses that exceed expenditure budgets, working procedural errors, and so on. Such things can cause non-current business activities and lead to loss of material. Because it is necessary to process monitoring and control to prevent that happening. Or if already there is a deviation, then the task manager to be able to control the situation so as not to harm the company on an ongoing basis. That’s where the benefits of the management accounting provides an information system to overcome the problems of irregularities that may occur in the company.
- As an operational reference
As a reference to everyday business operations and to get a working system that is effective and efficient, it takes their operational systems and standards compliant. Where it can be met with the management accounting information. Because managers have a constant need of the accounting information provided to be able to lead and run the company’s operations. An example of the condition, in which the manager of the production department requires accounting information provided to determine the cost of a new product. Such information serves to ensure that there is a correlation between the cost of the product and the price has been harmonious and in accordance with its marketing strategies. In another example, the marketing manager of the company will prepare a program of marketing for a particular product, then it must be based on accounting information as prior period sales volume, inventory levels of products, and the like.
Many of the operations of the company managers who rely their work programs for the implementation of a good working system, effective, efficient and targeted.
- Facilitate in decision-making
Facilitate in decision-making related to the completion of the company’s operational problems encountered. Standards and operational procedures already established managers do not always go smoothly. There will always be the possibility of certain problems related to it. Here, the company’s managers are required to immediately resolve problems that occur in order not to hurt the company significantly. You do this by taking appropriate measures and decisions targeted to resolve the issue through information provided accounting.
Without accounting information, management would be difficult to determine a good and right decision. Accounting responsibility is to collect and identify cost data and present it in the form of quantitative and qualitative information on the managers. Because the accounting information is very useful in helping to resolve the operational issues of the company. It is due to that information Accountancy is an important factor in the analysis of several alternative solving problems faced by business operations.
Examples of problems in addition to the operational business is lower competitor prices dibading companies. It is certainly the managers must take action whether to lower prices or increase promotional products and advertising. Then the act must be based on the financial data and information provided by accounting.
In addition to the benefits for managers, management accounting information is also beneficial for the company as a whole. The benefits include:
- Provide financial information
Providing financial information relevant to the company’s management in the implementation of the planning function. The main benefit of management accounting is to help companies in planning functions are arranged by the managers of the company. Management accounting functions provide data and financial information in the form of fees or any relevant budget for the benefit of the management plan.
- Provides analysis tools
Provides analysis tools are both quantitatively and qualitatively as pegambilan base management decisions. In addition to the functions of planning, management accounting information is also useful as an analytical tool. By providing information in the form of certain reports quantitative and qualitative help the company’s management to take decisions on matters of the company. For example, the report of the department of the company achievement. If the report indicates the problems, then management needs to search and find the cause of the emergence of the problem. For then the evaluative and corrective action taken if necessary. However, if the report does not indicate any problem, then the management can concentrate on other work program.
Essentially, the management accounting is a form of feedback to the management company that is useful in the utilization of the company’s economic resources effectively and efficiently.
- provide information
Provides information to external parties the company in terms of business reporting. A company may not be unrelated to the other party in order to smooth its business. As with business associations, which typically provide programs it easy for members of business associations in terms of promotions and the like. Therefore, companies need to also be members of a business association in accordance with the type of business. And usually the association requires certain information related to the company’s members. Here, management accounting is responsible for providing the required information.
In addition to the government, the company must comply with policies and regulations set by the government. For example in terms of taxation, companies should attach certain financial information for the settlement of tax obligations. And financial information provided by the accounting firm.
- provide information
Provide information to the determination and reporting of individual accountability and managerial enterprise work units. In large organizations usually divided into units of work and managerial smaller. Its function is to facilitate the clear division of labor so that operations run smoothly. Each unit of work and managerial accountability shall make a report on its performance. This information is compiled and provided by the accounting department work unit.
- Facilitate the coordination of activities
Facilitate the coordination of activities in the company. The number of work units or departments within the company requires the coordination of activities in order to run business operations smoothly. And it provide any additional information on accounting in order to ease the coordination activities. For example, in determining the price of the product, require data management cost of production and sales of production units. To promote the product, the marketing unit needs information management funds available from the company’s financial unit. (See also: Basic Concepts of Accounting Most Important)