Management accounting as the name suggests refers to that accounting which is done for the management, using management accounting the top management makes important strategic decisions regarding the future of the company from the data gathered from financial and cost accounting. In order to understand this better let’s look at some of the features of management accounting –
- The first and foremost feature of management accounting is that it provides accounting information to the top management of the company, hence in a way management accounting is not hardcore accounting rather its job is to convert complex information of accountancy into simple and comprehensive information for the management so that they can make future decision on the basis of such information.
- Another feature of management accounting is that it is more flexible as there are no fixed conventions or principals which is the case with financial or cost accounting, hence in management accounting there is more scope of changing things according to situations as and when they arise.
- Management accounting makes use of various fields like financial accounting, cost accounting, statistics, quantitative research, and economics. In simple words it integrates functions of many fields in order to provide management the best possible information so that they can make right decision at the right time.
- Management accounting is meant for internal users only that is the top management of the company unlike cost or financial accounting which are prepared for external parties like shareholders, creditors, employees, government and so on.
- There is no statutory requirement to publish the reports of management accounting in the public domain and hence company does not have to stress about publishing the reports every quarter or year which is the case with balance sheet or other reports of financial and cost accounting.
- Management accounting is not required every time rather it is needed when management has to make important decisions, in other words management accounting in the majority of the companies is needed temporary and not required regularly.
As one can see from the above that management accounting has many unique features which separate it from other branches of accounting like financial and cost accounting and that is the reason why in the past few years it has gained tremendous among companies all over the world.