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Historical Perspective of Management Accounting

             Management accounting has been defined as the process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information that helps managers fulfill organizational objectives its not just about money. It's about control. This paper will give the historical view of management accounting. Traditionally, management accountants' principal cost control technique was variance analysis, which is a systematic approach to the comparison of the actual and budgeted costs of the raw materials and labor used during a production period. While some form of variance analysis is still used by most manufacturing firms, it nowadays tends to be used in conjunction with innovative techniques such as lifecycle costing and activity-based costing, which are designed with specific aspects of the modern business environment in mind. Historical studies have played an obvious role in management accounting in recent years to include a role in economics and sociology, which provide a basis for management accounting research. As accountants use economic and sociological theories to explain management accounting practice, they may often be using theories suggested and supported by historical data. .
             The book, "Relevance Lost: The Rise and Fall of Management Accounting" introduces the history of management accounting. The book is very well documented in that Johnson and Kaplan were able to deduce different conclusions made by others. They start from the very beginning exploring as far back as the 18th century by discussing how textile mills started recording in their books accounting information. Accounting emerged as a discipline in the early 18th century, but their underlying purpose was not for internal uses but it was created so that stakeholders could gauge the value of their investment in the firms that put out these financial statements. Johnson and Kaplan highlight a number of firms that made important contributions to management accounting.

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