Role of Cost and management Accounting and effective business management
In a global market in the contemporary economic environment all business needs relevant and appropriate information quantitative as well as qualitative information, which is adequate to survive and grow in a market. In current times the market is unpredictable and dynamic in nature, The main objective of business organization is to maximize owners wealth or put it in other words to be profitable in the short-tern as well as in the long-term.
As discussed above, all business must have a management information system, which may be a simple information system to a complex statistical and analytical system or decision support system. The most important is the financial management information system because all business have to earn profit given the risk of operations. The management information system or the sub component management accounting gives regular financial reports to management at all levels regarding performance measures in financial and non financial performance criteria. This enable the organization to understand and identify weaknesses in tems of efficiency improvement and quality improvement of its products and services compared to its major competitors and suggest cost effective measures to improve organizational flexibility and innovative potential to meet competitive pressures. As well, give the organization the capacity to grow with minimum volatility in its profitability performance. The management accounting system is a cost control system as well as a tool for planning and controlling operations and suggest solutions to improve organizational efficiency and productivity of the organization as a whole. It also gives the managers the importance of non financial factors, which can be a crucial factor, which determines the innovative capacity of the organization particularly the hum factor in all organizations.
