A basic understanding of management accounting
The practice of accounting involves precise recording, analysing and summarising of transactions with the goal of creating a streamlined process for your business’s financial department. Management accounting aims to administer and supervise these financial procedures to ensure a clear, accurate summary for business owners – thus assisting the business’s financial decision-making process.
Businesses require a managerial evaluation of their financial transactions in order to make beneficial business decisions. Management accounting assesses the fiscal history of a business to provide insight onto its future investments and expenses. These types of summaries are generally conducted by a team of managers within a business and tend to be generated for internal purposes as opposed to for third-party investors.
Using a financial management accounting software solution such as QuickBooks to generate reports and statements is a cost-effective and time-efficient solution to preparing data for management accounting. Peruse our selection of accounting software now.
The management accounting journey
How each business handles their management accounting process may vary from company to company. However, a basic guideline of the management accounting journey is as follows:
- Preparation – The major purpose of managerial accounting is to provide accurate foresight of a business’s finances using pro forma analysis and statements. QuickBooks management accounting software stores all past financial documents and enables users to capture important statements for analysis easily – thus assisting in decision-making.
- Reporting – When preparing reports for management accounting, the format is slightly different to that of other financial statements in the sense that there are fewer figures; reports are merely summaries of a financial time period. As many managers do not have accounting expertise, data should be presented in its simplest form to facilitate easy understanding.
- Cost controlling – One of the major management accounting phases is cost management, or cost accounting. This process is used to assist in controlling the fees that are associated with the primary operations of a business, including labour, office materials and internal expenses. Precise analysis of internal costs will ensure that a company controls its funds efficiently, thus eliminating wasteful expenditure.
- Budgeting – Once all key financial statements are reviewed, a strategic plan is devised to prepare for long-term financial use. This process involves cutting costs where necessary and allocating funds to divisions for future production or expansion. A budget is then created by reviewing previous expenses, sales, and revenue and growth trends.
QuickBooks accounting software decreases your management accounting time
QuickBooks financial management accounting software enables businesses to capture and prepare all major financial statements needed for the managerial accounting process. By entering your business’s finance records and figures, QuickBooks programs assist in creating professional financial documents – thus creating reports faster than usual as the process is automated. Learn more about QuickBooks SimpleStart, QuickBooks Pro or QuickBooks Premier now to find a suitable package for your business.