Uses of management accounting
Management accounts should be used for planning and control, record keeping and decision making.
Uses of management accounting includes enabling you to:
- compare your accounts with original budgets or forecasts
- manage your resources better
- identify trends in your business
- highlight variations in your income or spending which may require attention
They should be used for the following:
Record keeping
- recording business transactions
- measuring results of financial changes
- projecting financial effects of future transactions
- preparing internal reports in a user-friendly format
Planning and control
- collecting cash
- controlling stocks
- controlling expenses
- co-ordination and monitoring of strategy/performance
- monitoring gross margins
Decision making
- using cost information for pricing, capital investment and marketing
- evaluating market and product profitability
- evaluating the financial effect of strategies and plans
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