Definition: What is Management Accounting?


When running a business, there are decisions that need to be made based largely upon the financial state of affairs the business is experiencing.

This is where management accounting comes in.

Management accounting helps business owners make decisions based on solid financial advice.

What is Management Accounting

Image Source: What is Management Accounting?

Management accounting is an accounting speciality where the accountant learns how to present financial information in a way that is useful to the managers making the decisions.

There are financial consequences to most decisions that managers make, and the clearer the financial picture of potential decisions beforehand, the easier it is for managers to make those decisions.



Addition Details and Definition

Management accounting involves not only a knowledge of accounting, but also a larger amount of business knowledge than might be needed by other accountants.

A management accountant needs to be able to help make inferences as well as interpret existing data.

Predicting outcomes, creating strategies and identifying potential financial pitfalls along a given path are all important skills for specialists in management accounting.

Those involved in other accounting specialties tend to have a largely technical set of responsibilities.

Management accounting involves having a much larger role to play in the company, as they are often working with top-level managers when it comes to making these critical decisions.



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