Management Accounting
Management also known as cost accounting is system of identifying, recording, analyzing and presenting data relating to organization’s own products/services, with main focus on entity’s internal system, cost accounting helps the helps at three namely planning, control and decision making:
Management accounting gathers cost information and relates it to cost objects, cost centers, budgets, standard costs ,processes, activities or products; variance analysis and finally to profit of organization
Differences between FINANCIAL and MANAGEMENT ACCOUNTING
|
TYPE OF DIFFERENCE |
MANAGEMENT ACCOUNTING
|
FINANCIAL ACCOUNTING |
| USERS | Internal users e.g. managers and employees | External users e.g. stakeholders, government authorities |
| Legal requirements | No legal requirements
|
Legal reporting requirements by government and other authorities |
| Time period covered | Historical and future information
|
Only historical information |
| Reporting formats
|
No specific formats | Specific formats e.g. SFP, SCI |
|
Nature of reporting |
Planning , control and decision making issues aid to management in both financial and non-financial terms
|
Performance analysis of organization over specific period of time mostly in financial terms |