The limitations of traditional management accounting are shown in

Traditional management accounting refers to the cost-centered, internal management as the goal, through cost accounting, budget management, performance evaluation and other means, to provide decision-making support for enterprises, management control and performance evaluation of the accounting management system. This kind of management brings a lot of benefits for enterprise management to a certain extent, but there are also some limitations.

First of all, traditional management accounting focuses mainly on cost management and ignores other factors related to business success. For example, traditional management accounting focuses only on cost control and ignores the importance of factors such as product quality, customer satisfaction, and employee satisfaction to the sustained growth of an organization. This approach tends to lead to companies achieving some success in cost control, but appearing to be underpowered in other areas.

Secondly, traditional management accounting lacks comprehensive control of inventory. In traditional management accounting, inventory is often seen as a cost, so companies often use the way to reduce the cost of inventory to control costs. But in fact, inventory also has other aspects of value, such as improving customer satisfaction, shortening the delivery cycle and so on. If a company looks at inventory only as a cost and ignores other values, it may cause the company to lose its edge in competition.

In addition, traditional management accounting is relatively inadequate to support investment decisions. The accounting methods of traditional management accounting are often affected by historical costs, fixed costs and other factors, while failing to accurately reflect the reality of costs and benefits. This leads to the fact that enterprises often make investment decisions only on the basis of historical data and experience, which lacks scientificity and sophistication.

In short, although traditional management accounting has brought benefits to enterprise management to a certain extent, its limitations cannot be ignored. Enterprises should actively expand modern management accounting tools to achieve more scientific and advanced management and decision-making.