What is managerial accounting?


Quick Answer

Managerial accounting, also called management accounting, is the manipulation of a company's financial information to allow managers to make informed business decisions, according to the American Institute of CPAs. Managerial accounting systems are generally designed to measure the efficiency of internal processes.

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Full Answer

The type of accounting information gleaned from managerial accounting includes cost and pricing of a company's products and services; budgeting; performance evaluation; and demand on capacity, notes ManagerialAccounting.org. Basically, managerial accounting is concerned with the forward use of financial information, rather than the historical record of financial transactions. Managerial accountants use industry-standard reports, such as the balanced scorecard, which is a set of financial and operational measures.

Managerial accounting is different from financial accounting, which is concerned with correctly recording a company's financial information for posterity. Financial accounting is used to provide government agencies and public investors with information that reveals how the company made, spent and holds assets and how its assets and liabilities affect its financial health. This information is published in government filings and made available to the public in annual financial reports. Comparatively, information generated through managerial accounting is generally for the use of managers and other company insiders. The information is typically confidential, according to ManagerialAccounting.org.

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