Management accounting, also known as managerial accounting or cost accounting, is the process of identifying, analyzing, interpreting, and communicating financial and non-financial information to managers for the purpose of decision-making and improving performance. It is an applied discipline used in various industries, and the specific functions and principles followed can vary based on the industry. The main functions of management accounting include:
- Helping forecast the future
- Planning and budgeting
- Measuring and analyzing performance
- Providing financial and non-financial information for decision-making
- Assisting in the formulation and implementation of an organizations strategy
Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company to draft accurate and complete financial statements for internal use. Management accounting is important for businesses because it allows them to translate hard data about their finances into reports that can be analyzed and used for strategic business decisions.
