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a) Financial Accounting- Financial Accounting provides what has been there in the past in the organization. But it is very necessary for the business organization to know where the company was placed last year. With this, the company can make very important and essential plans and forecast future. It contains adequate information that is required for decision making. Tools and techniques are there in management accounting but what bases will be used for the tools and techniques will be taken from the financial statements. Due to this, it is very important for management to have an effective financial accounting system.
b) Cost Accounting- It is an accounting method which provides technique to determine the cost of manufacturing a product or rendering a service. Cost is the most important factor in deciding the price of the product. Thus, a company relies heavily on the cost accounting system. Cost accounting provides tools like budgetary control, operating costing etc. which is very much important for the organization in decision making.
c) Financial Management- Planning and controlling of the financial resources comes under the financial management. Financial management answers the question that from where the funds will be generated and how it will be used. A primary objective of financial management is to maximize the earning of the company by efficiently utilizing the financial resources. Although it is a separate subject managerial accounting includes the operation of financial management.
d) Interpretation of Data- Financial data interpretation is done by the management accountant. He checks out on various financial statements. This helps in comparison the firm’s performance with the past performance or industry’s performance. If any wrong information is generated from the interpretation, then the conclusion will be wrong as well.
e) Management Reporting- Precise and appropriate reporting and timely reports are essential management tools in reaching decisions that make the best use of a firm’s resources. Thus, it is a duty of the management accounting to keep their management informed about the various operations of the organization.
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