Managerial accounting or management accounting is a set of practices and techniques which helps managers
with financial information and to assist them in making decisions and manage adequate control over corporate resources. For example – managerial accounting can give answers to such questions given below:
- What is the average cost per unit of labour of a company?
- How many assets in sales does each marketing dollar fetch in?
- What is the necessary rate of return to make a new investment advisable?
- Which actions depend upon the considerable expenditures and which earn the highest profits and how can the company make the best use of the former and minimize the latter?
Managerial accounting steps are planned mainly to bring the opportunity of knowledge to gain by decision makers within an organization. Whereas, financial accounting is concerned with offering information to stockholders, government agencies, creditors, and others who are outside the organization. A consequence of that divergence is that financial accounting procedures usually must be conventional to external standards, such as those developed by the Financial Accounting Standards Board (FASB), while management accounting steps are left almost fully to the prudence of each organizations.
The third major part of accounting is cost accounting, which is the method of determining the cost of a precise result or activity. Sometimes it is confused with the managerial accounting function, cost accounting information is applied by decision makers both inside and outside of a company. Cost and managerial accounting vary in that the latter goes away from the role of cost accounting by joining numerous management disciplines with financial information to make possible of internal decision making.
Theory of Managerial Accounting
Accountants within an organization who do jobs for the managerial accounting function usually perform for two major purposes.
First – They perform to generate routine reports including information about cost control and the planning and controlling of operations.
Second – Managerial accountants generate exclusive reports for managers that are applied for strategic and tactical decisions on matters like pricing, products or services, selecting which products to put emphasis on or not put emphasis on, spending on equipment, and formulating overall policies and long-term planning.
Managerial accounting functions comprise some factors given below:
- Identifying and measuring transactions and economic events
- Quantifying and surveying the value of those events
- Recording and classifying suitable transactions and events
- Analysing the causes for, and relationships between, the transactions and events.
Managerial accountants also help to decision makers who use the information they prepare, and estimate the connotations of past and future events on decided plans or decisions. They also do job to make sure the honesty of the information that they create and endeavour to put into practice a system of reporting that gives to the efficient measurement of management’s performance.
It has many scopes for students if the students want to become accountants in the future. If you are a student and want to take admission for this course, then go ahead for a successful career. There are some websites who help you in solving your managerial accounting assignments. Good luck!