Management accounting is also called as managerial accounting and can be stated as a process of providing accounting and financial management information and resources to the managers for the process of decision making. Management accounting is only mainly used by the internal team of a company, and this is the only aspect which makes it vary from financial accounting.

In this process, financial information and reports that include invoice, financial balance statement is shared for the process and knowledge of investment & management accounting by finance administration with the management team of the organization. Objective of management accounting is to use this statistical data and to make a better and accurate decision, controlling the firm, business activities, and the development of organization.

The major difference between management accounting and financial accounting is financial accounting is the collection, recording and presentation of accounting data to develop the financial statements for the advantage of the several stakeholders of a company. Whereas management accounting on one side, is the presentation of financial data and business activities for the internal management processing of the firm, which is helpful to account for business transactions.

In this article, let’s understand the benefits and objectives of management accounting.

Decision Making

This is the most essential advantage of the process of management accounting. It is the core purpose of accounting of investments. In this form of accounting, an individual can take help from techniques from all the areas like costing, economics, statistics, and several more.

It also offers us with charts, tables, forecasts and several such analyses that make the process of decision making quicker, easier and more justified.


Management accounting and financial management improves the overall efficiency of operation in a firm. Each thing is done in management accounting with a scientific system for evaluating and comparing the performance. With this, one finds deviations. One will take promotional decisions on this basis. Several other employees will also be motivated with this because if their performance will be favorable, they will be rewarded for this. This is the main reason management accounting enhances the efficiency.


Managerial accounting doesn’t have any kind of strict timelines like accounting and financial management. It is, in fact, a continuous and ongoing process. So financial and other information is provided to the management at regular intervals like weekly, monthly or sometimes even daily.

Hence managers can take help from the analysis and data to plan the activities of the firm. For instance, if the recent data shows a dip in the sales for a certain region, then the sales manager can advise the team and plan some action to rectify the situation.


Using of investment & management accounting budgetary control and capital budgeting tool, firm can easily succeed to decrease both operating and capital expenditures. After this, firms can reduce its price and then firms will receive amazing profits.

Identifying Business Problem Areas

If a particular product is under performing, or some department is running into unexpected losses, etc. managerial accounting is very useful to identify the underlying cause. Actually, if the management is diligent and their data and reports are frequent, they can identify the issues quite early on. This will also allow the management to get ahead of the problems.

Strategic Management

Concept of management accounting is not compulsory by any law. So it can have its own structure based to the firm’s requirements. So if an organization feels certain aspects require more in-depth analysis or investigation it can do so freely. This also provides them to have a clear focus on some core areas. The information presented to them gives them to make strategic management decisions.

Like if an organization wishes to start a brand new product line, or discontinue an existing one, management accounting will play an essential part in this strategy.

Wrapping up

Management accounting comes at regular intervals. So it also useful to provide few frameworks for the financial accounting, which only occurs at year-end. Nowadays all accounting systems are automated, so the recorded and verified data does a lot of help for financial accounting.