It is quite some time since I have written a blog for the ACCA web and now when I decided to write up my blog for January, I thought of focusing on the topics of Management Accounting and Costing, which are and have always remained my favourites as a student.
Management Accounting is a branch of accounting which is future-oriented and helps managers and those within the organization to take business decisions. On the ACCA syllabus, students are first introduced to Management Accounting and concepts in costing on Paper F2. The knowledge from this paper is used further in Paper F5 (Performance Management) and finally the student has an option of taking up paper P5 (Advanced Performance Management) as an option.
Working in an educational/training organization now, I would certainly say that many students are initially bit frustrated with Paper F2 as they are introduced to the fundamentals of costing and management accounting as they have very little prior knowledge or understanding about the basic concepts on this paper. On the same note, I believe students tend to be more comfortable with the conventional Financial Accounting paper – F3, as the basics of Financial Accounting have often been introduced to students coming in at the Fundamental level, either after completion of high school or after satisfying the eligibility criteria set for enrolling oneself on ACCA.
But I have also noticed that as students get to appreciate and understand Management Accounting and its practical applicability their interest in the subject picks up and they tend to enjoy learning this subject. Based on my limited experience, a small piece of advice to all of you studying for your Fundamental Knowledge paper F2 – “. In order to enjoy studying paper F2 or any other management accounting paper it is essential that you appreciate the practical utility of this magnificent branch of accounting. The more you tend to relate the concepts you study on this paper to real-life/ work the more interesting the subject and the process of learning becomes”. Perhaps the same approach may be extended to other areas of accounting as well but personally I have believed that costing and Management accounting can be more easily related to real-life than other branches.
The value that we as accountants can add with our knowledge and understanding of Management accounting cannot be better illustrated than with the example of the latest development in the Motor car industry – “TATA NANO” – the $2500 car from India. Having read some articles and seen clippings on the process behind developing the car I was made to understand that a major role in the development of this car was played by Management Accountants, through their expertise and advice on cost-reduction and in achieving a target-cost.
The economy at large is in need of innovative & inventive accountants, who can with the application of their technical accounting knowledge influence every walk of life.
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