The Use of Management Accounting Practice in Managerial Decision Making, A Case Study of Selected Real Estate Companies in Addis Ababa

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Addis Ababa University


In every organization decisions are regularly made as part of smoothening activities of the organization and to achieve their objectives. Decision makers use different types of information to make these valuable decisions. Accounting information is one of the information that managers and other concerned bodies use when they make decisions. International Federation of Accountants (IFAC) 1998 had identified the field of organizational activity encompassed by management accounting has developed through four evolutionary stages, that are the cost determination and financial control, information for management planning and control, reduction of waste of resources in business processes and creation of value through effective resource use. In view of this, the current study undertaken with the aim of investigating the management accounting practices & evolutionary stages in selected real estate companies in Addis Ababa city and to identify the types of decisions that managers often make and assess whether managers use management accounting information in decision making and help them to be effective in their decisions. The data used in this study was obtained through questionnaire. Questionnaire was prepared and distributed to finance managers, marketing managers, construction managers, office engineers and accountants. The current study provides empirical evidence to infer that the utilization of Stage 1 is dominantly applied and most of Stage 2 of management accounting techniques is still applied in practice. The results show that the use of management accounting information for decision making is very low and the management’s focus towards management accounting is below the required level. The findings of the research can be specifically informative for policy makers’ intent on developing management accounting skills among firms in Ethiopia. This study recommends the creation and enhancement of awareness among firms on the importance of Information for decision making practices as this is the most highly used management accounting practice amongst the real estate companies in Ethiopia.


A Thesis Submitted to the Department of Accounting and Finance to Undertake a Research in Partial Fulfillment of the Requirements for the Master of Science (MSc) Degree in Accounting and Finance


Accounting Information, Decision Making, Management Accounting