Management accounting plays an important role in helping managers make correct and effective business decisions. In the article below, 1C Vietnam will work with businesses to learn detailed information about the definition, roles and tasks of this type of accounting.

1. What is management accounting?

Management accounting is a field that focuses on providing financial information based on management requirements and financial and economic decisions within businesses. This helps businesses make effective decisions, such as planning, controlling and evaluating business operations.

2. Compare management accounting and financial accounting

Management accounting and financial accounting are two components of the accounting information system and have a number of things in common as well as a close relationship with each other. However, there are still differences between these two types of accounting. Below is a specific analysis to point out the similarities and differences between management accounting and financial accounting:

2.1. The same point

Similarities between financial accounting and management accounting include:

• They are all support tools and provide information to help businesses manage and effectively use their economic resources.
• Management accounting and financial accounting data are based on information reflected on original documents such as invoices, receipts, payment slips,...
• Both are concerned with the responsibilities of managers. Financial accounting provides information for managers to evaluate the responsibilities of departments and individuals within the enterprise. Management accounting provides information for managers to allocate responsibilities and reward and discipline.

2.2. Differences

Financial accounting and management accounting are used to provide information to different users. Here are the basic differences between these two systems:

3. The role of management accounting in businesses

3.1. For decision making

Decision making is an important function of an administrator, performed at every stage of the management cycle, from planning and implementation to inspection and evaluation. Administrators' decisions relate to all aspects of the business's operations, at all levels, from short-term to long-term.

Management accounting has the role of providing appropriate information for managers in the decision-making process such as options and criteria for evaluation and selection. This is the most basic and core role of modern management accounting, even recent development achievements still focus on supporting managers' decision making, especially decisions. strategic.

3.2. For planning and estimating

A plan is a system of goals to be achieved, accompanied by a roadmap and steps to complete. A business's operating plan includes both short-term (operational) and long-term (strategic) plans. On that basis, a business estimation system is built to link goals and resource mobilization plans.

During this stage, management accounting has the role of collecting appropriate information, including past information and future information, to serve planning and estimating. Information needs to be accurate and complete so that administrators can make appropriate decisions.

3.3. For implementing organizations

In reality, business activities always have many fluctuations and plans are often only general directions. Therefore, during the implementation process, administrators often have to make executive decisions to optimize resources to achieve goals.

Managers use management accounting information to accurately assess the current financial situation and business operations of the enterprise. Administrators need to note that at this stage, appropriate information still includes information for operational and strategic decision making.

3.4. For testing and evaluation

Inspection and evaluation is an important step in the management cycle, often performed periodically or unexpectedly to compare the implementation situation with the proposed plan, from which to estimate, analyze differences and make recommendations. adjustment decisions.

Management accounting has the role of providing factual and analytical information to help administrators evaluate and quantify the implementation of plans and estimates. From there, administrators can make timely adjustment decisions to respond to unexpected fluctuations. Accounting information at the inspection and evaluation stage is also effective in planning and estimating for the next period.

4. Content of management accounting

Based on the information provided, corporate management accounting includes:

• Cost management accounting and product prices : Provides information about production costs, product prices and profits.
• Accounting for revenue management and business results : Providing information about revenue, costs and profits of businesses.
• Management accounting for financial investment activities : Provides information about the effectiveness of financial investment activities.
• Management accounting for other business activities : Provides information about other business activities.

Considering the implementation process, management accounting includes the following stages:

• Formalize business goals into economic targets : Determine the business goals of the business and convert them into specific economic targets.
• Prepare general and detailed estimates : Forecast future economic targets of the business.
• Collect and provide information about the results of implementing goals : Collect actual data about business operations and compare with established estimates.
• Drafting management accounting reports : Synthesizing and presenting management accounting information to managers.

Thus, management accounting is an important profession in supporting business decisions for businesses. Management accounting information allows managers to clearly understand the company's operations and make correct, informed decisions. To learn more useful information about corporate governance, don't forget to follow the articles on 1C Vietnam's website.