Management accounting Essay Example | Topics and Well Written Essays - 1500 words - 3

Management accounting - Essay Example 17), management invented modern business. Early forms of management accounting integrated both decision-making and analysis, going beyond financial and operational performance data. Chandler stated that before managerial, there was no equivalent of the modem multi-unit organization as there was nothing remotely like the divisional Wed corporation (Chandler 1977, pg.18). Chandler states that the managerial revolution invents something new which it is frequently misunderstood as the "modern business enterprise". This did nothing less than overturn the old economic world which is a world within which he tells much basic economic theory is still distressingly rooted. The new form of management was accelerated by industrial revolutions in the 19th century. After the 20th century the impending requirements by financial accounting in most organizations developed new pressures placed on the capital markets, creditors and taxation (Schaltegger et al 2006, pg. 72). Decentralization involves th e distribution of decision-making authority within the organization by offering managers at different operation levels the authority to make decisions relating to their areas of focus. In the new form of management that was developed around 1850, decentralization of organizations is a key issue in its performance. ... The first structure was the development of a management system for individual single-unit organizations, such as the factory while the second structure was the development of management for the large multi-unit organization (Chandler 1977, pg.29). The structure of the management that was developed around 1850 is in the form of an inverted tree. The board of directors in an organization is above all other levels and below the board of directors is the managing director. The managing director is in charge of the organization activities at any given time. The managing director handles upcoming issues in the organizations and makes strategic decisions. Below the managing director, there are several branches which cater for different purposes. In an ideal organization, the branches could include the purchasing department, personnel department, operations director and finance director who in the organization has a different function that it has to perform for the smooth functioning of the organization. All branches are responsible to the managing director who is in turn responsible to the board of directors. The purchasing department has several functions in the organization which include the purchasing department where it procures all necessary materials that are needed for production or daily operation of the company or organization. The purchasing department is charged with a responsibility of continuously evaluating whether it is receiving the required merchandise at the least possible price so as to maximize profitability. In most organizations, the Purchasing department ensures timely delivery of materials from its associates like the vendors, and also ensures the accounts payable department to ensure that awaiting deliveries are received in full and are