Define and discuss in detail managerial accounting.
What is its purpose? How is it used?
What are the primary responsibilities of a management accountant?
Managerial accountants play a crucial role in businesses in creating and presenting financial and non-financial information to the management. Notably, the data is vital for decision making.
Answer and Explanation:
a)Managerial accounting refers to an approach used by accountants to identify, analyze and report financial information to the management. The information helps the management as well as internal parties to the organization to make informed decisions for the attainment of organizational goals.
b) The main purposes of managerial accounting include:
- Planning and controlling purposes. The financial data presented by accountants is used for budgetary purposes like panning for the available financial resources. Besides, the management uses the information to control operations like reducing costs to maximize profitability.
- Making managerial decisions. It is the role of the management to make decisions that contribute to the success of a business. The decisions primarily rely on or are driven by the available financial information.
c) The prime responsibility of a management accountant is to aid in the financial planning of a business. It is achieved through the preparation of reports, financial budgets, internal audits, and advising the management of an organization.
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from Business Management: Help & ReviewChapter 9 / Lesson 1