Management Accounting And Its Objectives/Functions

Management Accounting is comprised of two words ‘Management’ and ‘Accounting‘. It is the study of managerial aspect of accounting. It is the presentation of accounting information in such a way that it helps management in the creation of policy and day to day operations of an business and service.
Thus, it relates to the use of accounting data collected with the help of financial accounting and cost accounting for the purpose of policy formulation, planning, control and decision making by the management.
Objectives/Functions of Management Accounting are given below:
The functions of management accounting can be divided into two broad categories:
(1) Operating Functions
(2) Theoretical Functions
Operating Functions:
Management accounting means use of financial and accounting data for managerial functions. It requires systematic collection and processing of data. Such processing is termed as operating functions. The main operating functions of management accounting are as follows:
Recording of Data: Recording of business transaction is the basic functions of accounting system. Initially these transaction are recorded in their original form so as to maintain their basic entity and quality. Later on, these original recorded facts and data are classified into distinct groups and sub-records and finally analytical reports are drafted on the basis of these sub-records. These reports provide information base for managerial actions.
Validating the Data: The effectiveness of managerial functions depends upon the accuracy and adequacy of financial data. Hence, through proper communication and experience, it should be ensured by management accountant that the data available are complete and accurate at certain predetermined level of significance.
Interpretation of Data: Interpretation of data is an important function of management accounting. It involves impartial, objective and concise explanation of data and it’s analysis. In other words, financial data is generally collected and presented in a technical way. Management accountant analyses and interprets financial data in a simple way and present it in a non-technical language.
Communicating the Data: The collected and interpreted information in the form of quantitative expression can give fruitful results only when it is communicated to proper person and at proper time. To accomplish this function of management accounting several reports and statement are used by the management accountant.
Theoretical Functions:
 The theoretical function of management accounting is to help in effective and successful performance of managerial functions. Incidentally this becomes the objective of management accounting also. The main theoretical function of management accounting are as follows:
 Help in Controlling: control means to ensure work performance as per as plan and pre determined standards. It is possible through standard costing and budgetary control which are integral parts of management accounting.
Help in Communication: Management accounting plays an important role in the process of communication. All operating results and financial data are presented in the form of various reports and statements. These reports and statements communicate useful information to integral management as well as outside parties such as, shareholders, debenture holders, and other institutions. Sometimes some special reports or statements dealing with specific problems are also prepared for the purpose of conveying it to different levels.
Help in Co-ordination: Management accounting helps in over all coordination of various operational activities and this purpose is achieved with the help of various functional budgets.
Help in Decision making: Management accounting provides necessary analytical information to management which helps in process of rational decision making.
Motivating Employees: Management accounting presents various schemes of motivation for employees and does also help in implementation of these schemes.
It can be said that management accounting aims to provide useful accounting information to management for better decision making and executing of its policies. In other words, we can say that management accounting has been evolved to meet the needs of management.