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Summary of: The Evolution of Management Accounting by Robert S. Kaplan
Almost all cost accounting practices currently in use had been developed by 1925. Over
the last sixty years there has been considerable changes in the nature of the business
environment. Despite this fact, there has been little change in designing and putting into
action most cost accounting and management control procedures. For this reason it is
pertinent for those in the business field to fully understand the source of those practices, as
well as look for ways to improve those practices to better meet the needs of today business
environment.
There were many cost accounting developments made from 1850 through 1915. Some
examples include the demands imposed by the introduction of the railroad and the effects
on the steel industry, as well as the resultant activity from the scientific management
movement. Two major factors impacting business during this time period was the DuPont
Corporation in 1903, as well as the reorganization of General Motors in 1920. These two
businesses furnished the opening for extreme changes in the management control in
decentralized corporations such as the following: ROI standards for performance
evaluation, formal budgeting, and incentive plans. The only three notable practices
recently developed, includes the discounted cash flow analysis, the multiperson decision
theory models, and also the application of management science.
