Characteristics and Nature of Management Accounting

It is matter of fact that management accounting is the backbone for every organization. Because it assists the management of organization through providing the relevant and accurate information at the right time for taking rational decisions to short out the business problems. Thus, it is clear that a management accounting should possess these essential characteristics:-

• Helpful in Decision Making:- It is an important feature of management accounting. In fact, it helps the management of organization by providing relevant and accurate information from various sources (like financial and cost accounting) in order to make sound decisions to remove business problems.

• Provides Data, Not the Decision:- It only provides required data and information to the management, not the decision. It is up to the management that how they utilize the available data and information to resolving the business problems through taking effective decisions.

• Selective in Nature:- It is also a potent characteristic of this accounting system. Here selective means, in management accounting a management accountant is only collect those data and information from a variety of alternatives which may create more benefits and easiness to the management in decision making. Hence, it is selective in nature. 

• Assist in Achieving Objectives:- Management Accounting is always assist organization in achieving its predetermined goals. Because it provides detailed information in regarding the weakness and the strength of organization in the form of report, on the basis of that any organization can eliminate recognized weakness (business problems) and may achieve its goal easily.

• Related to Future:- Management Accounting is an accounting system which is directly related to future course of events. It means by preparing this account any organization can forecast its future on the basis available information in relating the past events (Historical data).

• Increase in Efficiency:- It also plays an essential role in increasing efficiency of organization. As we know that in this competitive business age it is difficult for every organization to carry out its entity for ever. Hence to survive for long run it is important for organization to increase its efficiency by finding the errors and removing it through management accounting techniques (standard costing, budgetary control, control accounting), 

• Use of Special Techniques:- Management Accounting uses special tools or techniques (like standard costing, budgetary control, control accounting, marginal costing etc) for composing the accounting information and data more accurate and relevant. So that management can easily make their decisions. The type of technique to be applied will be determined according to the situation and necessity.