Introduction to management Accounting

Essay by rollingstone74University, Master'sB+, February 2014

download word file, 2 pages 0.0


Financial decisions are reached based on accounting information. These information are usually of a quantitative nature and helps the manager in an organization to determine when to either increase or decrease the price of a product, take a loan to finance the business, develop a new product or service, decrease or increase the operation cost of the business or even change the strategy of the business (Atrill & McLaney, 2012, p.17). The main purpose of accounting information is to aid in informed decision making by managers. Management accounting can be defined as a process of identifying, classifying, collecting, analyzing and communicating financial information for decision making and for accounting information to be of use to the manager, it should be relevant, reliable, comparable, understandable and above all, it should be regarded a material (Atrill & McLaney, 2012, p.16-18).


According to (Atrill & McLaney, 2012, pp.32-33),

major differences that differentiate management accounting from financial accounting are dependent on the type of groups of people that are intended to direct the information. While the information is directed to internal users of the organization in management accounting such as senior managers or the board of directors, financial accounting focuses on external users such as auditors, investors or creditors who are interested in the day to day activities of the organization. The nature of management accounting reports are detailed, purpose oriented with a decision in mind while financial accounting reports are for the public consumption, showing the organization's financial standing. Also of note is how objective these reports are such that while management accounting reports are not regulated, produced as either financial or non-financial, financial accounting reports are regulated, produced as it is subject to specific guidelines and principles (Generally Accepted Accounting Principles -...