What is Management Accounting?
The term management accounting or managerial accounting relates mainly to the preparation of financial statements and other accounting information for use by the management of the business.
Management are normally involved in planning, controlling and budgeting for the future of the business, and therefore require more detailed financial information than that provided in published financial statements available to the general public.
As the accounting information is normally for use inside the business, the presentation does not have to comply with accounting standards, and can therefore be in a format most suitable for allowing management to control, operate, and make decisions about their business.
Management accounting is in contrast to financial accounting which is normally for use by third parties external to the business and must therefore be prepared in accordance with standard accounting procedures and guidelines such as GAAP.
For further information see the Wikipedia Managerial Accounting definition.
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About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.