Management accounting is the process of preparing and providing financial and non-financial information to the management of an organization to support their decision-making process, planning, and control activities. Management accounting focuses on the internal management of an organization and provides information to managers to help them make informed decisions and take appropriate actions to achieve organizational objectives.
The information provided by management accounting includes financial statements, budgets, forecasts, cost accounting reports, and performance metrics. This information helps managers in setting goals, formulating plans, monitoring performance, and evaluating the effectiveness of their decisions.
Management accounting plays a critical role in strategic decision-making, such as identifying and evaluating new business opportunities, evaluating investment decisions, determining pricing strategies, and analyzing the performance of different business segments.
The techniques used in management accounting include cost-volume-profit analysis, variance analysis, activity-based costing, and budgeting. In addition, management accounting also involves identifying and managing risks associated with the organization’s operations and strategies.
Overall, management accounting provides valuable insights to the management of an organization, helping them to make informed decisions, optimize the use of resources, and achieve their strategic goals.