Before presenting the evolution and historical development of managerial accounting, it is necessary to understand the term ‘ management accounting’ because it includes two major concepts of business organizational activities. Robert S, Kaplan identified two major areas of management accounting and these are cost accounting and management control. These two areas are very vital for organizational success. The management accounting process is helpful in executing cost accounting and management controlling activities. R. N. Anthony defined that “ management accounting is concerned with accounting information that is useful to management” . T. G.
Rose elaborated that management accounting is meant to adapt and analyze the accounting information for better diagnosis and explanation for assisting management in a decision-making process. Many critics and scholar observe the cost accounting, financial accounting, and management accounting as different areas of finance. However, this can be interpreted as the traditional concept of management accounting. This concept was in trend prior to 1980s before the modernization of cost accounting and management control. Thomas Johnson traced that US corporations started to focus on management accounting during 1850-1925 as this field was very important for the growth and development of transportation, manufacturing and distributional process.
However, during this period, the corporations did not stress bringing innovations in their management accounting system. Kaplan observed that after 1925, significant and interesting developments were made. The academic developments of management accounting were one of the major instances in this respect. This has led to influences the management accounting thought process. For example, Shillinglaw studied that during 1the 950s, corporations started to treat capital budgeting in new ways and they innovated new techniques for discounted cash flow methods and analysis.
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