DISCUSSION QUESTIONS
1. Explain and describe the development of management accounting from its inception until
now!
2. Explain the differences and similarities between financial accounting, cost accounting and
management accounting!
Answer!!!
1. Development of management accounting:
Initially, many management accounting was developed by accountants in
manufacturing companies. But until now, the business world is moving very dynamically,
the market is becoming more open and competitive. The economy also no longer relies on
manufacturing which is a form of the industrialization era but instead shifts to the service
sector. One of the characteristics of the service sector is that its workforce is the main cost
component and is usually skilled. For example health services, where a doctor provides
health services to his patients and then a tax consultant who provides tax reporting services
for his clients, the implication is that simplicity is the key word for accounting systems in
the service industry. Because many of the decision makers who use the system are doctors,
professors, who are too busy to understand complex systems, in order for them to use it,
the information must be in an easy-to-understand form. Thus, simplicity is a key
consideration in accounting system design because complexity will incur costs of data
collection and interpretation, which may outweigh the potential benefits. The development
of management accounting is also influenced by global competition. The distance between
the welfare and prosperity of each country is now narrow. The world's economic power is
no longer absolute in one country. Each country has a competitive advantage, so companies
in each country need an accounting system that is more accurate and able to provide
information at the right time and is kept up to date because the business world is
increasingly dynamic. Every company or organization must be able to adapt quickly and
managers must be able to better understand and predict the impact of their decisions. Rapid
technological progress is undeniable, very large influence on the development of
management accounting. Technological advances occur in almost all fronts. Starting from
the production line and the use of the accounting system. This then enables the company to
implement comprehensive operational changes through business process reengineering,
fundamental rethinking and radical business process redesign to improve cost performance,
quality, service and speed. The company also reduced processing time by redesigning,
simplifying and automating production processes. One of the management changes that has
resulted in increased efficiency in business processes is the use of the Just In Time (JIT)
philosophy, which is a philosophy to eliminate waste by reducing the time spent by
products during the production process and eliminating time spent by products on activities
that do not add value. Another management approach that focuses on efficiency is lean
manufacturing, namely the implementation of continuous process improvements to
eliminate waste from the entire company. For example, Saga Matsushita Electric on Japan's
Kyushu Island reduced the time it takes to produce a finished product from 20 days to 40
minutes, by changing conveyor belts to a group of robots. After World War I, there were
financial accounting regulations which had the impact of reducing useful accounting
information for evaluating the performance of subordinates in large companies (lost
1. Explain and describe the development of management accounting from its inception until
now!
2. Explain the differences and similarities between financial accounting, cost accounting and
management accounting!
Answer!!!
1. Development of management accounting:
Initially, many management accounting was developed by accountants in
manufacturing companies. But until now, the business world is moving very dynamically,
the market is becoming more open and competitive. The economy also no longer relies on
manufacturing which is a form of the industrialization era but instead shifts to the service
sector. One of the characteristics of the service sector is that its workforce is the main cost
component and is usually skilled. For example health services, where a doctor provides
health services to his patients and then a tax consultant who provides tax reporting services
for his clients, the implication is that simplicity is the key word for accounting systems in
the service industry. Because many of the decision makers who use the system are doctors,
professors, who are too busy to understand complex systems, in order for them to use it,
the information must be in an easy-to-understand form. Thus, simplicity is a key
consideration in accounting system design because complexity will incur costs of data
collection and interpretation, which may outweigh the potential benefits. The development
of management accounting is also influenced by global competition. The distance between
the welfare and prosperity of each country is now narrow. The world's economic power is
no longer absolute in one country. Each country has a competitive advantage, so companies
in each country need an accounting system that is more accurate and able to provide
information at the right time and is kept up to date because the business world is
increasingly dynamic. Every company or organization must be able to adapt quickly and
managers must be able to better understand and predict the impact of their decisions. Rapid
technological progress is undeniable, very large influence on the development of
management accounting. Technological advances occur in almost all fronts. Starting from
the production line and the use of the accounting system. This then enables the company to
implement comprehensive operational changes through business process reengineering,
fundamental rethinking and radical business process redesign to improve cost performance,
quality, service and speed. The company also reduced processing time by redesigning,
simplifying and automating production processes. One of the management changes that has
resulted in increased efficiency in business processes is the use of the Just In Time (JIT)
philosophy, which is a philosophy to eliminate waste by reducing the time spent by
products during the production process and eliminating time spent by products on activities
that do not add value. Another management approach that focuses on efficiency is lean
manufacturing, namely the implementation of continuous process improvements to
eliminate waste from the entire company. For example, Saga Matsushita Electric on Japan's
Kyushu Island reduced the time it takes to produce a finished product from 20 days to 40
minutes, by changing conveyor belts to a group of robots. After World War I, there were
financial accounting regulations which had the impact of reducing useful accounting
information for evaluating the performance of subordinates in large companies (lost
