Financial and management accounts

Uses of management accounting

Guide

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:

1. Record keeping

  • recording business transactions
  • measuring results of financial changes
  • projecting financial effects of future transactions
  • preparing internal reports in a user-friendly format

2. Planning and control

  • collecting cash
  • controlling stocks
  • controlling expenses
  • co-ordination and monitoring of strategy/performance
  • monitoring gross margins

3. Decision making

  • using cost information for pricing, capital investment and marketing
  • evaluating market and product profitability
  • evaluating the financial effect of strategies and plans