Managerial Accounting

Name: Instructor: Subject: Date: Importance of Management Accounting Accounting is one of the oldest practices in financial responsibilities. It involves writing reports otherwise known as financial statements. These reports are produced for various reasons, at different periods in time as well as for a different audience. Management accounting is preparation of reports that are financial statements on management and accounts. These reports are on a short-term basis within the financial year of accounting (Accounting Coach). Business managers from various departments use them to make decisions, whichare short-term; this could be on a daily basis, weekly or monthly.The reports mostly communicate the amounts of cash in hand, revenues made within the period, pending orders, debts that are still outstanding, receivables, amounts of raw material available, inventory among others (Bill, John and Mostafa,). In some reports, analysis of variance and charts indicating current trends with statistics are included for managerial purposes. The management teams to forge forward into the future use these reports internally, without the involvement of the stakeholders or the public in general. Financial accounting is a different entity all together from the management accounting in business.While management accounting does short-term reports, the financial accounting, consolidates all the financial transactions and summarizes them into an annual statement. These reports are presented to the stakeholders for scrutiny, unlike the internal management accounting reports that are used internally. They are also different from the internal reports, in that they communicate past financial transactions; this is because they are actually reporting to the shareholders and lenders, telling how their money was spent. This is common with corporate that trade their stocks publicly in the stock exchange market. The common notion, that the financial statements show the company’s value, is wrong. Instead, the reports provide adequate information, which is crucial when assessing the company value (Accounting Coach). Importance of management ...