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Essay Paper on Management Accounting

This report is intended to shed light on such phenomenon in the company management as a management accounting and to tell about its roles for budgetary control of all company’s operations, the importance and impact of performance appraisal as well as employee rewarding. As far as the goal is to inform the new management accountant in the Eurotunnel Company about all the abovementioned procedures, this report is supposed to be information about the operation of the Eurotunnel Company in the context of the forementioned issues.

So, what is management accounting? This is a kind of accounting which is intended to provide all the useful information for the managerial needs. It differs from, for instance, financial accounting in the means of information recipients. Generally, accounting studies, records and classifies monetary effects of different transactions and events in the business of some company, analyses all information and then reports this information to interested parties – such as stakeholders or creditors. But this financial information is prepared for the outsiders of the company and is not of use by the insiders – the management of the company. As far as in our progressive world everything develops at high rates management needs timely data to analyze the present operation of the company and to create the corresponding plans for the company in order to improve this operation or to continue operating in the same way.

When the purposes of management accounting are viewed, the main purpose consists in enhancing profits and decreasing loses of the company. But in details, the objectives of management accounting are numerous. First, it helps planning and policy formation after analyzing past experiences and estimating future results. Second, management accounting helps to understand financial information which is sometimes difficult to apprehend with the help of statistical devices such as diagrams or charts. Third, as far as the data gathered can be easily understood and analyzed it helps to make decisions faster and in simpler way. Fourth, with the help of management accounting managerial control can be easier implemented – every employee in the company can be controlled with the aid of devices of management accounting.

Fifth, every single position of concern can be reported to the management at once and thus necessary steps will be taken to prevent problems in the company operation. Sixth, with the help of management accounting it is easy to motivate employees: they receive fill powers in their fields and have the chance to make decisions and to set their own goals and choose the course of action appropriate for every given situation. Seventh, while management accounting makes its contribution into decentralization of the company, on the other hand together with investment centers, budget centers, profit and cost centers it helps to create more effectual organization structure. And finally eighth, management accounting is used to coordinate business operations.

It is also necessary to define the following functions of management accounting. It is used to modify accounting data to make it useful for management decision making, to plan and forecast the outcomes of business operations, to select and interpret the important accounting data for the top managers to be able to understand and use it. Management accounting also helps to organize communication between different levels of management, with its help management control is facilitated and thus managers are able to see what the quality of employees’ work is. What is more, this kind of accounting allows managers to use not only financial but also qualitative information such as case studies, engineering records and other data. With the help of management accounting decision-making and coordinating are held efficiently.

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