Management Accounting

Management Accounting

Student’s Name

Institutional Affiliation

Professor’s Name

Date

Role of Management Accounting

Introduction

Management accounting involves tracking of internal costs of a company’s processes to help the organization make decisions related to production, operation and investment. Management accountants gather process and communicate information to help the management in planning, controlling and evaluating business processes and the organizational strategy. Management accounting helps an organization to know the cost of operations, the efficiency of budget and the appropriate proportions of allocating funds to production, sales, and investments. In overall, managerial accounting enables the managers and members of an organization to make informed decisions, increase the efficiency of their jobs and improve organizational performance (Collier, 2009).

Both financial and managerial accounting is important in the decision-making process of the organization by providing information about its performance and cost information for valuing inventories on the balance sheet. Reporting of financial accounting to external users follows the guidelines of Generally Accepted Accounting Principles. In contrast, managerial accounting provides information that helps the planning, controlling and measuring an organization’s current and future operations and to make decisions about the products or services. Management accounting includes tax accounting, financial accounting, information analysis, and other accounting activities.

The primary users of management accounting information are the people within the organization such as managers whereas financial accounting prepares financial statements for people outside the organization. They external users include lenders, shareholders, customers and government agencies. Though the financial accounting information is prepared for external users, the managers rely on the information to evaluate the organizational...