Management accounting explained
In short, Management Accounting is analysing financial and costing data and translating this data into useful information for management.
Management accountants advise managers on the financial implications of big decisions, formulating business strategy and monitoring risk.
You often find management accountants in roles like financial controllers or CFO's within an organization.
Task examples of a management accountant:
- Preparation of forecasts and budgets and performance reports;
- Analyse various capital investment options;
- Setting up and implementing a project administration;
- How to include overhead costs into the price of a product
Business owners and managers are often familiar with the term financial accounting.
Below you will find a short overview of the differences between financial and management accounting.
| Financial accounting | Management accounting |
| Preparing financial statements to provide external users (eg shareholders, creditors, investors, various government bodies) with information to evaluate the financial position of the company. | Combine financial information with non financial information data to produce timely trend reports and statistics for internal use. |
| Financial accounting presents a specific period of time in the past and enables the audience to see how the company has performed. | The information is used by managers to make current and future financial decisions of a business. The information is based on current and future trends. |