How can someone prepare a management account?
Quick Answer
To prepare a management account, make sure to have the most up-to-date statistical and financial information; reports can be generated weekly, biweekly, monthly and even quarterly. Using computerized programs, such as Microsoft Excel or Sage, can make keeping track of management accounts easier in some cases.
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Businesses will sometimes use what is called a "chart of accounts," or COA, to record and classify different types of data and proceedings. A COA is a list of all ledger accounts that might be used in business transactions. Microsoft Excel has templates to help accomplish this. Companies are not legally required to keep management accounts, but it makes it easier to run a business when they are used. The following is an example of the steps that go into making a management account.
- Get all the operating and cost data together and record the information.
- Go over and interpret the data.
- Prepare the budget and cost reports.
- Interpret the data from the budget and cost reports.
During the gather and input stage, either write the information by hand or input the data into a program like Excel or Sage. The program will help systematically classify, code and check for any errors. Interpreting that data ensures that the information is correct and is organized by the company's standards. Once the budgets and cost reports have been entered in, the data can be reviewed and changes made as needed to the budgets and expenses.
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