Every subject has its own set of positive and negative aspects. In case of management accounting as well, there are certain limits.
- It is a support system: This management accounting system is merely a tool that is used for computing data. It is a mere presentation of facts and not a solution. It has no connection with human mind and hence at times, decisions can be taken from personal prejudices. In such cases, this tool becomes redundant.
- It is still in its evolutionary stage: Being a new tool on the block, it is still developing. Hence, there are a number of details or managerial aspects that it does not cover. Naturally, chances of minor error remain.
- Limitations regarding basic records: Since management accounting is computing of data that is based on financial accounting data and cost accounting data that is provided. All these have certain limitations, which is why on the whole it affects management accounting data.
- Expensive: This is one system that is suitable only for huge organisations as instalment of this requires high amount of capital.
In spite of these limitations, this is a tool that is most used in present times.
Links of Previous Main Topic:-
- Introduction to accounting and branches of accounting
- Preparation of final accounts
- Introduction of fund flow statement
- Introduction cash flow statement
- Ratio analysis significance of ratio analysis
- Fixed assets and depreciation meaning causes objectives methods and basic factor
- Cost accounting concept objectives advantages limitations general principles and cost sheet
- Job costing
- Introduction process costing
- Activity based costing introduction concept and classification
- Introduction inventory pricing and valuation
- Standard costing introduction
- Management accounting
Links of Next Finance Topics:-
- Differences between financial accounting and management accounting
- Differences between financial accounting and cost accounting
- Differences between cost accounting and management accounting
- Test questions management accounting
- Marginal costing
- Relevant cost for decision making
- Budget and budgetary control
- Limitations of historical accounting
- Introduction to responsibility accounting
- Introduction to financial management
- Introduction and types of dividend
- Concept of cost of capital
- Capitalization meaning
- Concepts of working capital
