This type of accounting is often considered more exciting than general financial accounting. A management accountant has a lot more freedom in the way they present information than financial accountants do. In addition, management accountants don’t just comply with rules; they use their brainpower, diligence, and skills to come up with better ways of doing things.
Management accounting (also referred to as managerial accounting) is the process by which managers of a company collect information, both quantitative and qualitative, and use the information to make important business decisions. This is in stark contrast to financial accounting where managers gather information and present it to stockholders in accordance with generally accepted accounting principles (GAAP).
Accounting Management
Most people don’t look at managers as accountants and most people don’t look at accountants as managers. However, part of the responsibility of a manager is to make decisions; and in order to make good decisions, you need information. Accountants are experts at knowing what information to gather, how to gather it, and how to present it in a way that is easy for management to understand. More and more the trend is that accountants are becoming managers.
What is a CMA?
Most people in the business world have heard of certified public accountants (CPA’s). Not nearly as many have heard of a certified management accountant (CMA). If you want to become an expert at management accounting then you will likely need to pass the CMA exam. The CMA exam focuses a lot on management and cost accounting. Up until say the last 20 years cost accounting was considered the same thing as management accounting, but now managerial accounting takes on the above the cost line items as well.
Cost accounting is exactly what it sounds like, trying to place costs on certain items. It is only a subset of what management accountants do nowadays.
Some of the biggest developments in the management accounting area include activity-based-costing, the balanced scorecard, and standard costing.
