Q:

What are the functions of management accounting?

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Quick Answer

The functions of managerial accounting include analyzing, collecting and reporting information regarding the finances and operations of a business. Managerial accountants typically report data, statistics and recommendations internally to managers of a company or business, according to Accounting Tools.

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Full Answer

A managerial accountant provides the company with key financial information to determine financial goals and profit margins, according to Accounting Tools. For example, managerial accounting functions to determine cash flow or profits the business has generated and calculates the breakeven analysis by evaluating the unit values of inventory to determine appropriate prices for services and products.

Managerial accounting evaluates target costing within a business, according to Accounting Tools. For example, a managerial accountant evaluates the cost of time, supplies and inflation to understand how these factors affect revenue and accumulates projected costs for the design of new products and services. The process of utilizing managerial accounting also assists with trend analysis by analyzing spending patterns and inventory evaluations to determine overhead costs that may be hindering profit margins.

Managerial accounting helps determine capital budgeting analyses within a company, according to Accounting Tools. The company's fixed assets are evaluated and compared with depreciation to determine their viability in relation to the company's revenues.

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