Relationship Between Management Accounting and Business Model

Abstract

Any organisation carrying on business activities for profit or non profit purposes do employ various methods or techniques to ensure that its activities are conducted in line with the motto of deriving maximum benefits from its efforts. In pursuit of this goal, the organisation tends to rely on preparing in advance a plan for future period which is generally called a Business Model or Plan and measures the results of activities with the aid of Management Accounting principles to judge whether the activities are yielding the desired results or not. This article tries to bring out the process and purpose of preparing the Business Model and the support the organisation derives from Management Accounting Principles to assess the progress in line with the Business Model. While the Planning exercise is one looking into future and charting out the desired course, the Management Accounting principles support the progress with the backing of hardcore data and analysis of deviations throwing light on the corrective actions that may be necessary for fulfilling the Organisational Goal as envisaged in the Business Model.