What is Management Accounting?

Posted in Accounting, Management Accounting on Jan 29th, 2014 | 0 comments

The core functions of management are planning, forecasting, organizing, directing, coordinating and controlling. So, accounting that helps the management to carry out these functions is called management accounting.

In other words, management accounting aids the management in decision-making by analyzing and interpreting the accounting data.

Definitions

“Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.”

“According to the Chartered Institute of Management Accountants (CIMA), it is “the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources.”

Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities” (CIMA Official Terminology).

Managerial accounting encompasses techniques and processes that are intended to provide financial and non-financial information to people within an organization to make better decisions and thereby achieve organizational control and enhance organizational effectiveness – Wilson and Wai

In a nutshell, management accounting is accounting (i.e. producing useful information) for management (whoever those managers happen to be and whatever their job titles).

In this sense, ‘accounting’ includes the production of all information useful in running the organization. Hence, such information may be:

• Financial or non-financial;

• Accurate, or broadly correct;

• Actual (certain) or estimated (uncertain);

• Based in the past or the future;

• Detailed, or in a highly aggregated form;

• Presented in any of a variety of spoken or written forms, such as numbers, tables, and graphs;

• Related to profits/losses, costs/incomes, volumes, quality indicators, trends, etc.

What is CIMA: Chartered Institute of Management Accountants. CIMA is the world’s largest professional body of management accountants. They offer the most relevant finance qualification for business.

Web URL: http://www.cimaglobal.com/

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Skills of Accountants

Accountants manage the financial statements and records of individuals and organizations. See the list below to find out if you possess some or all of these skills that will make you a good accountant!