What is management accounting?

Management accounting is one of the types of accounting existing. This type of accounting is characterized by the fact that the information obtained from it is intended for internal use specifically to the administration department from which it takes its name.

Keeping administrative accounting entails numerous benefits for the company, especially when making decisions about actions in the medium and long term. Despite its importance, many companies do not perform this type of accounting. Mainly because it is not mandatory to keep an administrative accounting in the company, as it happens with other accounting modalities.

Characteristics of management accounting

These are the main characteristics that define the operation and development of administrative accounting in the company.

  • Not mandatory: performing this type of accounting is optional. There is no legal obligation to carry out administrative accounting.
  • Not regulated: its composition is not regulated either, so there are different formats depending on the company and its needs.
  • Updated information: the information contained in the administrative accounting must be updated and recent. In order to serve in decision making.
  • Estimated information: since its main use is to serve as a basis for decision making, much of the content of management accounting is based on estimates.
  • Internal use: Administrative accounting is done for the internal use of the company.
  • Internal and external information: although its use is internal, administrative accounting does not include only internal data. It is also necessary to include data from external accounting to complete the information.
  • Responds to the administration department: Administrative accounting is done for the purpose of being used by the administration department or management. This often causes its content to vary depending on the information needs of the company's administration.

Leave a Comment