Limitations of Management Accounting

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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.

 

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