The Control Functions of Accounting and Management Accounting

Accounting is a human act to recognize and control economic activities by means of accounting concepts (such as capital, assets, liabilities, profit, expenses, and revenues) and accounting methods (such as double entry, T form-account, and accounts system). It has a strong relation to the social structure, because these concepts and methods are not merely mathematical – they also rely heavily on historic, economic and political contexts. Consequently, there has been some debate as to whether accounting is fundamentally a mathematical method, an economic behaviour, or a political activity, but this question is yet to be settled.1 It may appear to be an easy solution to consider accounting as a boundary science in which the above three aspects interact with each other,2 but such a conclusion cannot clarify the fundamental nature of accounting, because it assumes an ambiguity as to which of the three aspects fundamentally regulates the essence of accounting, and what relationship exists between them. Therefore, the first question that we must consider is: what is the fundamental nature of accounting and how does it relate to management accounting? Such an elucidation may offer the key to an understanding of the features and structures of today’s management accounting.