Managerial accounting is an accounting system prepared by management accountants with the sole aim of assisting the management of a company make an informed internal economic decision.
Management accounting as it is popularly known as is a branch of accounting that uses many decision making tools to filter information leaving only useful information for the consumption of responsible officers.
DIFFERENCE BETWEEN COST ACCOUNTING AND MANAGEMENT ACCOUNTING
There is actually no difference between cost accounting and management accounting when viewed from a broader view but, in the world of academics, a slight distinction is made. While cost accounting is the branch of accounting that handles the dirty aspects of collecting, collating, analyzing and interpreting many variables. Cost accounting provides the data in piecemeal while management accounting prepares it in a form of information meant for consumption. This is a tiny distinction you will agree but, is very important especially in academic field.
QUALITIES OF MANAGERIAL ACCOUNTING INFORMATION
TIMELINESS: for managerial accounting information to be worth anything, it must be supplied to the intended users at the right time. Information that is supposed to guide a manager in deciding whether to embark on a seasonal promotion will be useless if provided after the season has elapsed.
COST EFFECTIVE: cost benefit analysis of any process of making managerial accounting information available must be considered. You cannot spend $10,000 just to make $5,000.
RELEVANT: every form of information must be relevant for any prevailing circumstance if it is to be useful to anyone. This feature also includes providing information in the right format. You don’t expect a PR manager to be comfortable with charts and diagrams in information that is expected to be used for public relations.
UNSTRUCTURED: management accounting dose not have to be in any particular format. It is prepared in any format that is acceptable to the end user.
PREDICTIVE FEATURES: managerial accounting information must have predictive powers for it to really serve its intended purpose. Investment appraisal is just one of such predictive instruments used by management accounting.
MANAGEMENT ACCOUNTING COMPARED WITH FINANCIAL ACCOUNTING
REGULATIONS: while there are regulations governing the preparation of financial accounting, there are no such laws governing management accounting. The professional competence of the management accountant is all that is required.
TIME FRAME: while the financial accounting information covers a specified accounting period, managerial accounting information can be prepared to cover any time frame that the management deemed appropriate.
USERS: financial accounting information is meant for both internal and external users while management accounting information is meant for only internal users.
FUTURISTIC: while financial accounting is based on historical information, management accounting is based on likely outcome of events.
REQUIRED KNOWLEDGE OF A MANAGEMENT ACCOUNTANT
In addition to possessing all above named skills, every management must have a Professional Affiliation of any recognized body in your society. CIMA is one of such professional accounting bodies that management accountants can join.
Managerial accounting as you have seen is a solid branch of accounting that relates to many other disciplines thereby making it a multidiscipline subject. Like every thing in life, managerial accounting skills cannot be acquired in one place like this article you just finished reading. More information can be found by exploring other information found in this website. You may decide to buy the Amazon books displayed below for your consumption.