Online Class: Managerial Accounting 101

Managerial accounting is a form of accounting that deals not only with financial information, but information that is not always easy to quantify into numbers and reports. Things like employee performance, efficiency, product rates and customer satisfaction stats are all things that managerial accountants deal with. They take that information and put it into reports that are easy for managers to understand. By doing this, managerial accountants help managers make the important decisions to turn the company in a new direction, or help it continue on as a profitable and respected organization.

Financial accounting looks at the company as a whole. The net profit of the company, the revenue and expenses of the company and more. It does not look at the parts that make up the whole. This is what managerial accounting does. It takes the company and breaks it into parts that can be studied and analyzed. Maybe one department is bringing down the rest like a lead weight attached to a strong chain. If this is happening, the methods of managerial accounting will find it and that will help managers take the information and use it to make the company better and more efficient as a result.

Managerial accounting is not new, but it is revolutionary and despite originating over 100 years ago, companies are only now realizing the true power of this amazing form of company management.

Courses Frequently Bought Together:

Accounting & Bookkeeping 101 for Everyone

QuickBooks 101

Payroll Management 101

Course Motivation

Accounting, like music, comes in many different forms. It is not a single entity that encompasses all needs, but a varied type of specialty that has the ability to help an organization in a variety of ways. Accounting, many may not realize, has many different styles, such as Lean Account, Auditing, Cost Accounting, Social Accounting, to name a few. While all these types of accounting are interesting in their own rights, the one form that we will be looking at will be one of the most important type for a company, managerial accounting. 

The Three Areas of Managerial Accounting

1. Strategic Management. This is the advancement of the role of the management accountant to make the accountant on strategic par with the entire organization.
2. Performance Management.  This is the development of business decision making that will manage the performance of the company.
3. Risk Management. This contributes to the practice of identifying, measuring, managing, and reporting any risks to the overall achievement of the goals that the company has set for itself. 

In addition to the three focuses discussed above, managerial accounting has six aims that it uses as a guide for its use:

1. Creating strategies for the business to succeed in the future.
2. Planning and building activities for the business.
3. Helping to make decisions in the business.
4. Creating the best and most optimal use of resources in the company.
5. Helping with the financial report preparation of the company.
6. Protecting and safeguarding the assets of the company. 

History of Managerial Accounting

By the 20^th century, companies were facing new pressures through regulation, federal taxation, creditors, and capital markets. As a result, many firms had to raise funds from sources of capital far removed from traditional areas. To be able to do this, companies had to use detailed financial reports that would be able to show the strength of the company, based on historical data, to investors and creditors. 

Conclusion

Accounting in companies has generally focused on how the company did in the past, as a basis to gain more investors for the future. However, this is beginning to change as companies start looking forward towards how their companies will do in the future. Through the use of management accounting, companies can make the decisions that will help their businesses in the future and keep the company going strong into the future. 

Financial accounting may have been the dominant form of accounting during the 20^th century, but times have changed and now companies are looking to the 21^st century as the era of management accounting. 

This is a dynamic new world that many companies have ignored since the early 1900's. Those companies willing to look at management accounting as the wave of the future, and not from the past, will be the companies that will do well. They will need management accountants to do it, making managerial accounting one of the go-to fields for accountants in the coming years.