Managerial accounting, also known as management accounting, is a branch of accounting that involves the use of accounting information for internal decision-making and to assist in the management and performance of control functions. It is different from financial accounting, which produces official financial statements for public consumption that conform to prevailing accounting standards. The main objective of managerial accounting is to assist the management of a company in efficiently performing its functions: planning, organizing, directing, and controlling.
Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. It involves identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organizations goals. Management accountants look at the events that happen in and around a business while considering the needs of the business, and from this, data and estimates emerge. Cost accounting is the process of translating these estimates and data into knowledge that will ultimately be used to guide decision-making.
Some of the key features of managerial accounting include:
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Internal Use: Managerial accounting is primarily used for internal purposes.
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Decision-Making: Managerial accounting helps managers make informed operational decisions.
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Financial Information: Managerial accounting involves the presentation of financial information for internal purposes to be used by management in making key business decisions.
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Planning and Control: Managerial accounting helps with planning, organizing, directing, and controlling functions of a company.
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Analysis and Interpretation: Managerial accountants analyze and interpret accounting information to help managers make informed operational decisions.
Overall, managerial accounting is an important tool for companies to make informed decisions and achieve their business goals.
