Q.State the main objectives of management accounting.

Management accounting is kept not because any law requires it but because it helps management run the business better, so all its objectives flow from the needs of management.

The first objective is to provide information for planning the future; the rest build on it — supplying data for decisions, controlling operations against the plan, and reporting the results to management.

Management accounting exists purely to help management run the business better, so its objectives are all directed to management's needs. The main objectives are the following.

1. To help in planning and forecasting. To provide the cost data, budgets, forecasts and trends that management needs to plan the future and set targets.
2. To help in decision-making. To supply analysed data for specific decisions — make-or-buy, accepting a special order, continuing or dropping a product, pricing — so that management can choose the best alternative.
3. To help in controlling performance. To compare actual results with budgets and standards, highlight the differences, and so enable management to control operations and correct deviations.
4. To help in coordinating operations. To link the different departments together through budgets and reports so that they work towards common goals.
5. To communicate information. To convey the right information, in the right form, to the right level of management at the right time.
6. To interpret financial information. To analyse and interpret raw accounting figures — through ratios, comparisons and charts — so that their meaning is clear to managers.
7. To motivate employees. To set targets and measure performance against them, thereby motivating managers and staff.
8. To help in maximising profit and efficiency. Ultimately, by improving planning, control and decision-making, to raise the efficiency and profitability of the enterprise.

A common error is to give only 'decision-making' as the objective. The answer should bring out the full range — planning, control, coordination, communication, interpretation and motivation — since the objectives cover the whole task of managing information for management.