Management accounting which is also known as the managerial accounts is applied to the use and provisions of the accounting information to the managers within the organizations to offer them the basic things in order to create informed decisions of business which would allow the organizations to be appointed in the control and management functions.
Features of the management accounting information are:
The management accounting is basically forward-looking and not historical
The management accounting is intended and designed to use by the managers within any organization, on the contrary of being determined for use by the creditors, public regulators and shareholders
This process of accounting is a model formed on with the degree of consideration to generically support the decision making
The management accounting is confidential and only used by the management
This type of accounting is computed by the reference to the requirements of the managers and it often use the management information systems
According to the American Institute of Certified Public Accountants or AICPA, the practice of management accounting extends to three areas. These areas are mentioned below:
Strategic management- Achieving the management accountant role as the strategic partner in any organization.
Risk management- Contributing to the practices and frameworks for measuring, identifying, reporting and managing risks to achieve the objectives of any company
Performance management- Managing the accomplishment of any organization or developing the practice of the business decision-making
Traditional vs. innovative practices of management accounting
Within the Management accounting area, there are numerous tools, techniques, approaches and methods floating around. The difference between the innovative and traditional practices of management accounting is best illustrated with visual timeline of the managerial costing. The Traditional Standard Costing or the TSC was used in the Cost Accounting earlier and now a days it is a central method in the practice of management accounting as it is used for the financial statement reporting for valuation of balance sheet line items like inventory valuation and Cost of Goods Sold Or COGS as well as for the valuation of the income statement.
The traditional standard costing should comply with the Generally Accepted Accounting Principles or GAAP and it aligns more with answering the requirements of financial accounting rather than offering solutions for the management accountants. The conventional approaches limit them by describing the cost behavior in terms of the sales volume or production.
The role of the management accounting within any corporation
Consistent with other roles,today the management accountants have the dual reporting relationship. The provider and strategic partner of the decision based operational and financial information, the management accountants are responsible for managing the business team and to report the responsibilities and relationships to the finance company of any corporation.
For assistance with youryou can visit classof1.com
Classof1.com is open 24/7. You can call us at 1-877-252-7763 or drop an email to