Accounting Analysis : Management Accounting

2168 Words Nov 17th, 2014 9 Pages
MANAGEMENT ACCOUNTING
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MANAGEMENT ACCOUNTING
Accounting is a way of measuring a business 's financial performance through maintaining records and analyzing them. Financial accounting system produces reports that are generally intended for external stakeholders to evaluate a business. Management accounting is used to provide internal information that management uses in order to assess performance toward goals and objectives.
Financial accounting uses Generally Accepted Accounting Principles (GAAP), to produce the financial statements, such as an Income Statement, Statement of Cash Flows and Statement of Financial Position. Financial Accounting Standards Board (FASB) publishes the Generally Accepted Accounting Principles.
Management accounting is often used by the management of a business to keep track of performance and identify areas of improvement. Management accounting reports can be prepared for the business as a whole, a division or a cost center, and usually include variances from budget and forecast, as well as financial metrics that are specific to the individual business.
Management accounting typically does not follow or is based on any national or international accounting standards. Management accounting system is designed according to specifications of each industry or according to a company’s own business structure, operations and needs. There are several advantages of management accounting.…
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