Managerial accounting also called management accounting, is a field of accounting that provides economic and financial information for managers and other internal users.
The activities that are part of managerial accounting are as follows.
- Explaining manufacturing and nonmanufacturing costs and how they are reported in the financial statements.
- Computing the cost of providing a service or manufacturing a product.
- Determining the behavior of costs and expenses as activity levels change and analyzing cost-volume-profit relationships within a company.
- Assisting management in profit planning and formalizing these plans in the form of budgets.
- Providing a basis for controlling costs and expenses by comparing actual results with planned objectives and standard costs.
- Accumulating and presenting data for management decision making.
Managerial accounting applies to all types of businesses- service, merchandising, and manufacturing. It also applies to all forms of business organizations- proprietorship, partnership, and corporations. Managerial accounting is needed in not-for-profit entities as well as in profit-oriented enterprises.
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