Management accounting, also known as managerial accounting, is the process of preparing accounts and management reports that provide timely and accurate statistical and financial information required by managers to make both short-term and day-to-day decisions. Unlike in financial accounting where annual reports the for external stakeholders, management accounting services generate weekly or monthly reports for a business’ internal audience like the CEO and department managers.
Management accounting reports show the sales revenue generated, amount of available cash, the state of accounts payable and receivable, the number of orders in hand, outstanding debts, inventory, and raw material. These reports may also include variance analysis, trend charts, and other statistics.
The management accounting process is made up of four basic functions. These functions play a vital role in the managerial functions of a manager. They include:
Planning in managerial accounting services involves formulating long-term and short-term actions and plans to achieve a particular goal and provides information necessary for decision making. The budgeting process is entirely developed around reports that are accounting-related and helps make it easier for managers to plan by providing them with reports that estimate the effects of actions on a business’ ability to achieve it’s desired goals.
Organizing involves the assigning of responsibilities to staff and establishing the organizational framework to ensure that a business’ objectives and goals are achieved. It also involves clarifying each manager’s lines of authority and responsibility. Management accounting services help managers by providing them with reports and the information they need to regulate and adjust activities and operations as required.
Control in management accounting involves monitoring, evaluating, measuring, and correcting actual results to ensure that an enterprise’s plans and goals are achieved. Managerial accounting services help managers control functions by creating performance and control reports that highlight variances between actual and expected performances. These reports serve as a means for taking the necessary corrective actions to control business operations.
Decision making is the process of choosing between competing alternatives and is plays a crucial role in each of the management functions mentioned above. No plans can be made without decisions being made first. This usually involves choosing between competing methods and objectives to carry out chosen objectives. Management accounting services can help management structure decisions while providing alternatives and their consequences in a way that’ll be easier for managers to evaluate.
Management accounting services are important for any business that is looking to manage its finances and operations more efficiently. For more information, consider getting in touch with a professional managerial accounting services provider today.