In management accounting or managerial accounting, managers use accounting information in decision-making and to assist in the management and performance of their control functions.
>>>PUT SHARE BUTTONS HERE<<<
👉 Management accounting in the context of Cost accounting
Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, allocating, aggregating and reporting such costs and comparing them with standard costs". Often considered a subset or quantitative tool of managerial accounting, its end goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.
Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making.
In this Dossier
- ⭐ Core Definition: Management accounting
- 👉 Management accounting in the context of Cost accounting
- Management accounting in the context of Accounting
- Management accounting in the context of Accounting information system
- Management accounting in the context of Accounting period
- Management accounting in the context of FP&A
Management accounting in the context of Accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used interchangeably.
Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by management to enhance business operations. The recording of financial transactions, so that summaries of the financials may be presented in financial reports, is known as bookkeeping, of which double-entry bookkeeping is the most common system. Accounting information systems are designed to support accounting functions and related activities.
Management accounting in the context of Accounting information system
An accounting information system (AIS) is a system of collecting, storing and processing financial and accounting data that are used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting financial reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities. Accounting information systems are designed to support all accounting functions and activities including auditing, financial accounting porting, -managerial/ management accounting and tax. The most widely adopted accounting information systems are auditing and financial reporting modules.
Management accounting in the context of Accounting period
An accounting period, in bookkeeping, is the period with reference to which management accounts and financial statements are prepared.
In management accounting the accounting period varies widely and is determined by management. Monthly accounting periods are common.
Management accounting in the context of FP&A
Financial planning and analysis (FP&A), in accounting and business, refers to the various integrated planning, analysis, and modeling activities aimed at supporting financial decisioning and management in the wider organization. See Financial analyst § Financial planning and analysis for outline, and aside articles for further detail. In larger companies, "FP&A" will run as a dedicated area or team, under an "FP&A Manager" reporting to the CFO.
FP&A is distinct from financial management and (management) accounting in that it is oriented, additionally, towards business performance management, and, further, encompasses both qualitative and quantitative analysis. This positioning allows management—in partnership with FP&A—to preemptively address issues relating, e.g., to customers and operations, as well as the more traditional business-finance problems.Relatedly, although Budgeting and Forecasting are typically done at specific times in the year—and correspondingly cover specific time periods—FP&A, by contrast, has a wider brief re both horizon and content. "FP&A Analysts" thus play an important role in every (major) decision by the company—ranging in scope from changes in headcount to mergers and acquisitions.