What Is the Purpose of Management Accounting?
Management accounting helps organizations improve their ability to control costs and plan for the future through financial forecasts. It also focuses on providing reports to ensure comprehensive management oversight.
A key component of managerial accounting is performance evaluation. In addition to providing a financial forecast, it also focuses on analysis to determine where the organization may have gaps and how it can improve. In doing so, the organization can leverage key components of management accounting, including estimating costs for all departments, establishing performance standards, generating essential information to balance accounting across the organization, and monitoring all costs to determine how reasonable they are for the specified activity.