What is management accounting and how does it work?

One of the few characteristics that all organisations share is their reliance on consistently accurate accounting. Accounting, a critical component of any successful business, refers to the measurement, processing, and communication of critical financial information. Even when a business is not for profit or government-owned, meticulous accounting remains a top priority.


What is management accounting, you may ask? Or, more importantly, what contribution does management accounting make to the organization’s success (or failure)?

An Overview of Management Accounting


Management accounting, in its simplest form, is a collection of processes designed to generate financial information for internal use. Management accounting provides financial data to the company’s executives, managers, and employees, enabling them to make proactive decisions to improve the company’s performance.


Thus, one could argue that management accountants serve as strategic partners to the business, identifying opportunities to increase profitability, reduce expenses, and generally improve efficiency. Whereas routine accountants may track a business’s financial performance, management accountants analyse complex data in order to identify areas for continuous improvement.

Alternatively, management accountants go further than traditional accountants by attempting to explain “why” the business performs the way it does. Not to mention whether any improvements can be made to its performance.


Traditional financial accounting, for the most part, places a premium on the production of financial documents and statements for external parties – stakeholders, government agencies, and customers, for example. In comparison, management accountants devote their entire efforts to educating internal decision-makers. They are able to direct critical decisions regarding the company’s future by utilising a variety of specialised management accounting tools.

Among the responsibilities intends to assign are the following:

  • Preparation of the organization’s taxes
  • Managing your finances
  • Reporting on income statements
  • Cash flow statements


Calculating stockholder equity changes

The first two of these responsibilities would be handled by a management accountant, while the remaining responsibilities would be handled by a financial accountant. Accountants often have a broad range of responsibilities, while others specialise in one or the other.

As businesses worldwide continue to face the strictest financial rules and regulations in history, there has never been a greater demand for the services of qualified accountants. Whether you pursue management accounting or financial accounting, you’ll discover a plethora of career opportunities.

Private businesses of all shapes and sizes have developed an instinctive preference for accountants to assist them in securing their financial futures. The same is true for non-profit organisations, where monitoring financial activities is critical to ensuring their continued viability. Government agencies are constantly hiring talented accountants for more official positions, while qualified accountants frequently choose to work privately or on a freelance basis.


While it is frequently assumed that a formal degree is required, this is not the case. Those who hire capable accountants are far more concerned with their abilities and competencies than with their paper credentials. Nonetheless, it is necessary to demonstrate your educational background, to the extent that the client considers acceptable.

Online education is the ideal solution for those who need to balance a hectic schedule with high-quality accounting studies. At Brentwood Open Learning College, we offer a comprehensive range of fully accredited accountancy and finance courses to ambitious students from all over the world. Without time constraints, deadlines, or qualification requirements, a career in accounting may be more accessible than you believe.

Making a choice
Have a question about the online Bachelor’s/Master’s Degree offered by London School of International Business, UK ?  Our professional and friendly Admissions staff will be delighted to walk you through your choices. Simply Chat with us or email us or WhatsApp us, and we’ll get back to you.

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