Management accounting is a multi-component system necessary to ensure accounting, analysis, and planning of the company's current investment and financial activities. Many entrepreneurs often compare management accounts vs financial accounts, since both operate similarly. However, financial accounting is law-regulated and focused on external users of business information, while management accounting is critical for the company to manage exclusively. Production costs and resources are the subjects of management accounts.
Nevertheless, the introduction of a management accounting system influences making management decisions related to further business promotion. There are several objective reasons for the usefulness of the management accounting system, including:
- maximising revenue;
- minimising costs;
- maintaining the existing market share, entering new areas and collaboration;
- achieving and maintaining the desired rates of economic growth;
- technological leadership in the industry;
- achieving, maintaining, or increasing the profit of sales, assets, and equity;
- creating a positive company image;
- avoiding bankruptcy, etc.
Determining the actual manufacturing costs and sales of products, expenses, the income of the enterprise and its planning to identify financial results are also advantages of using accounts services. Thus, the timely intervention of competent specialists can change the current situation dramatically and open up a new space for business growth.