The paper "Management Accounting Innovation" is a perfect example of a business assignment. Managers within organizations need management accounting information so that they are going to be more effective in their work as managers. Accounting for managers is different from financial accounting in many ways, as it is intended for the managers, who are not accountants by profession. Management accounting helps managers to ensure that the resources available in the organizations are put into good use and are properly accounted for. Management accounting practices vary widely, but they can mainly be classified as traditional or innovative.
Traditional practices have been there for many decades, and the reason why there has been a demand for change from these traditional practices to innovative ones is due to the fear that there will be an excess of management accountants who are not competent enough in the ever-changing business environment (Drury, 2007). This essay will mainly seek to analyze how much management accounting innovation has become one of the core themes driving modern organizations today. Cost accounting, which entails assessment of the costs of production or business, is the major component of management accounting.
Management accountants use cost accounting as a tool in decision-making processes in the business regarding cost reduction and the best use of resources. Therefore, if there are any reforms in the practices in management accounting, then most of these innovative reforms have happened in cost accounting more than in any other area. Many reforms in traditional cost accounting have occurred, and the innovative Activity Based Costing, also known as the ABC innovation, is one of the major innovations in management accounting. The Balanced Scorecard (BSC) method is also one of the innovations in management accounting (Sisaye, 2001). The above two major innovations in management accounting will be analyzed in this essay in light of the main purpose for the same.
These two, however, are not the only innovations in managerial accounting; there are many other similar management accounting innovations.
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