Accounting Practices

A type of accounting that is used to structure the financial obligations of managing a business is managerial accounting. It identifies the financial information of a business and processes it for the success of the company. Managerial accounting keeps a business focused and on track with its financial goals through a number of things such as measurement, analysis, communication, and interpretations of its financial status.

Managerial accounting performs several tasks that assist in running the finances of a business. It provides and tracks the costs of a business's services and production outcomes. This information is useful in determining the value that a product should be sold at, in association to the company's overall financial needs. It sets budgets for businesses and provides reports of the company's performance. It focuses on inventory data and compares budget amounts to actual outcomes. It provides analysis of cost and cost benefit, rate and volume, variance, cost volume profit, client profitability, buy versus lease and life cycle cost. (Manal)

In the 19th century managerial accounting started as a way of figuring out the cost of producing individual products. It was used to determine the difference between the amount of money budgeted to the amount of money actually being sold. By the middle of the 19th century, railroad managers invented a system that would allow them to figure the costs of carrying different types of freight along multiple rail lines. This helped them make improvements and pricing decisions to help better their organization's financial goals. As time went by more and more organizations expanded the focus and need of management accounting to help improve their organization. (Atkinson, Kaplan, Matsumura, & Young, 2012)

Strategy is a plan of action that managers establish to achieve certain goals in the present, immediate future and distant future. It involves finding what is right for the organization to make it successful in the...