The function of management accounting essay

The function of a cost and direction comptroller is to guarantee that information meet the demands of apportioning cost between cost of goods sold and stock lists for users within or outside of the concern, to present relevant information to help directors to do determinations so that they are able to be after, control, step the public presentation and uninterrupted betterment to the concern Drury In the direction accounting field, the allocating of cost between cost of goods sold and stock lists are of import.

The function of management accounting essay

Order Positive accounting theory Positive accounting theory PAT is a general term for any theory that provides descriptive information regarding the behavior of accountants. In looking at the apparent acceptance by politicians, firms and wide publication in academic journals PAT could easily be mistaken as being a success.

A deeper analysis of the premises of PAT, its questionable scientific status, and the groups upon whom this theory has appealed to would suggest that it is flawed on many levels and is little more than an argument for deregulation and market capitalism.

This opposes its claim to be a useful theory used regularly by those concerned with the effects of accounting policy on the status of the firm. The Premises of Positive Accounting Theory.

The semi strong form of EMH argues that capital markets will reflect all information that is publicly available and it is this form that Watts and Zimmerman claim to be predominant.

The Ball and Brown study rejected the argument put forward by normative theorists that present accounting results were misleading and irrelevant and stated that historical cost accounting is actually useful Deegan This was because their study demonstrated that unexpected accounting earnings produced abnormal returns in capital markets.

This was also the case for unexpected poor earnings as they produced abnormal losses in capital markets. Watts and Zimmerman used this research in developing PAT to illustrate that because there was a reaction in capital markets when accounting information showing abnormal results was released this information was useful and those who wanted to change the present system of measurement failed to appreciate the incumbents usefulness.

This was then used to form and anti regulatory stance. These firms could determine the best ways to report for themselves and it is believed under this theory that auditing will also occur without regulation because users of information will demand audited information so as to give it some value Mouck This means in a nutshell that firms are a nexus where various self motivated utility maximizes met to generate as much wealth as possible for their own selfish selves.

This will mean tying bonuses to goal achievement and this then produces the need for accounting information with which to measure goal achievement. For example, the bonus plan hypothesis states that management will change their accounting policies to the extent that is reasonably allowed in order to maximize reported income if their bonuses are dependant on the level of reported income due to their self interest.

This notion of self interest can also be applied to the other PAT hypothesis put forward by Watts and Zimmerman. Therefore, the premises of Positive Accounting Theory can be summarized as: The Flaws of Perfect Markets.

The first flaw that can be found with a premise of PAT is that of economics and its reliance on the theoretical perfect market. A perfect market relies on amongst other things perfect information and no transaction costs. It is also difficult to imagine equilibrium for information when accounting information contributes to this equilibrium.

Watts and Zimmerman also say that regulation and political costs interfere with the operation of perfect markets. The Flaws of Efficient Market Hypothesis. This lack of perfect markets then calls into question the EMH as it is upon perfect markets that it finds its basis Deegan Defenders of the EMH will argue that there is empirical evidence to back up this perspective; however an analysis performed by Chambers in demonstrated that the Ball and Brown research on the EMH relied on some rather superficial evidence.

Chambers tells of how only a very small number of shares were ever traded after the release of information and the evidence did not include collapsed companies.

The function of management accounting essay

It is also pointed out that capital market reactions to accounting information were not a new discovery and that researchers had known of it for some time. Plausible explanations for examplethat much investment is done in an ad hoc manner also find no place with in the EMH framework.

Essentially the EMH and the premise of PAT that historical cost information is useful and the system does not need additional regulation are questionable and perhaps somewhat dogmatic.In simple terms, management accounting is the amalgamation of the two important functions ‘management’ and ‘accounting’.

Thus when the principles of management and accounting are married to achieve corporate objectives the process is . initiativeblog.com has been an NCCRS member since October The mission of initiativeblog.com is to make education accessible to everyone, everywhere.

Students can save on their education by taking the initiativeblog.com online, self-paced courses and earn widely transferable college credit recommendations for a fraction of the cost of a traditional course. The most commonly cited functions of management are planning, organizing, leading, and controlling, although some identify additional functions.

The function of management accounting essay

The functions of management define the process of management as distinct from accounting, finance, marketing, and other business functions. Accounting is an essential function in any well-managed organization.

From small non-profit organizations to government agencies and large multinational corporations, managing and accounting for financial resources requires professionals with a solid foundation in accounting principles. This free History essay on Essay: The Civil Rights Movement is perfect for History students to use as an example.

The Function of Management Accounting Essay Sample Modern business environments are increasingly competitive and dynamic. Global competitors in advertising, public relations, e-commerce and demand-based supply chain management dominate business.

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