Management accountants seek to support management decision making by the provision of information and the analysis of financial performance. Whereas the financial accounts provide data for external use, management accountants provide data for internal decision making.
The main functions of this management accounting are:
To classify and calculate costs of production which is also known as cost accounting.To provide estimates of future expenses and revenues, this is a process known as budgeting.
To provide data on which investment decisions can be based.To identify inefficiencies within the organization To control costs and manage the flow of cashTo seek opportunities, example to identify 'tax breaks', possible cost savings and movements in the foreign exchange rates which could be exploited by the firm.
So basically, this type of accounting helps identifying all the major aspects upon which a company's decisions are based. This helps immensely in managing the company and is especially useful for the managers for taking each step and deciding what needs to be done for every department. Not only will it calculate the costs but also find out how to save costs in future thus being very vital for any business.
Management accounting is a system that is in place to keep a record of non-financial information that is given to assist both managers and staff in making decisions.this method is used internally.
Management accounts are crucial to any business, particularly PLC's etc. They depict the profit and loss of the business as an overview. This will also break the revenue the business accumulates and the over heads and expenses. This is obvious to determine whether the business is making money or not and the strength's and weaknesses etc.
Management Accounting helps in Budgeting by classifying and calculating costs and estimating the costs and revenues for the future. Management Accounting plays a major role in the internal decision making for the organization. Management accountants also find ways to manage the organization’s resources in a better way by doing cost savings. Management Accounting makes it possible for the management to understand the needs of the organization and those of the different departments.
Using Management Accounting is very important because it helps in managing the internal operations of an organization. Just as Financial accounting is vital for external investors and creditors, Management Accounting is important for the internal managers.