Limitations of Management Accounting
cs executive cost and management accounting mcq objective notes
The management accountant has the responsibility of producing and providing dependable accounting and other relevant data for the use of management. The information and reports presented by management accountant suffers from the following limitations:
• In accounting different terms carry different meanings under different set of circumstances and conditions. Such meanings and figures may superficially resemble one another and a person who is not, familiar with them may easily become confused or frustrated.
• Management accounting data cannot be completely accurate in all respects as approximation is involved in the compilation and preparation of such data.
• Management accountant can provide only the quantitative data as far as available, to the management. Business problems and their decisions often require additional quantitative as well as qualitative data which may be outside the purview of the management accountant.
• A management accountant may provide information and figures in most appropriate form to the management. The same set of figures, if not acted upon by the management, becomes useless or if misunderstood by the management, may lead to unwise actions.