Management Accounting

MANAGEMENT ACCOUNTING

= provision of accounting information for company’s internal users. It is the firm’s internal accounting system and is designed to support the information needs of managers. The Management Process is defined by the following activities:

* Planning requires setting objectives and identifying methods to achieve those objectives.

* Controlling is the managerial activity of monitoring a plan’s implementation and taking corrective action as needed.Control is usually achieved with the use of feedback, which is information that can be used to evaluate or correct the steps being taken to implement a plan.

* Decision making is the process of choosing among competing alternatives.

= The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.

Unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting generates monthly or weekly reports for an organization's internal audiences such as department managers and the chief executive officer. These reports typically show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable andaccounts receivable, outstanding debts, raw material and inventory, and may also include trend charts, variance analysis, and other statistics. Also called managerial accounting.

= Management accounting is generally concerned with informing managers so that they stay up to date with relevant information so that they can make informed business decisions.

The differences between management accounting and financial accounting include:[1]

1. Management accounting provides information to people within an organization while financial accounting is mainly for those outside it, such as shareholders

2. Financial accounting is required by law while management accounting is not....