Role of Cost and management Accounting and effective business management

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In a global market in the contemporary economic enviornment all business needs relevant and appropraite information quantitative as well as qualitiataive information, which is adequate to survive and grow in a market. In current times the market is unpredictable and dynamic in nature, The main objective of business oranization is to maximize owners wealth or put it in other words to be profiatable in the short-tern as well as in the long-term.

As discussed above, all business must have a management information system, which may be a simple information system to a complex statistical and analytical system or decison support system. The most important is the financial management information system because all business have to earn profit given the risk of operations. The management information system or the sub component management accounting gives regular fianacial reports to magement at all levels regarding performance measures in financial and non financial performance criteria. This enable the organization to understand and identify weaknesses in tems of efficiency improvement and quality improvement of its products and services compared to its major competitiors and suggest cost effective measures to improve organizational flexibility and innovative potential to meet competitive pressures. As well, give the organization the capacity to grow with minimum volatility in its profitablity performance. The management accounting system is a cost control system as well as a tool for planning and controlling operations aand  suggest solutions to improve organizational efficiency and productivity of the organization as a whole. It also gives the managers the importance of non financial factors, which can be a crucial factor, which determines the innovative capacity of the organization particualarly the huam factor in all organizations.

As discussed above, management accounting system and management information system, which is in tume with its organizational objectives, organizational culture, operations, stucture and human resources is a vital importance. This is because sound information is the basis of sound rational decision making in any organization to use economic resources to be profitable. There fore, in this sense the appropriate design of managment accounting system is essential to all business to be profitable in the short-term as well as in the long-term in a dynamic and unpredictable global market.

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