Benefits of Managerial Accounting
How do managerial accounting practices benefit business organizations?
Nowadays, managerial accounting practice is practiced by many successful producers in Japan, Korea, China and others. Therefore, they are able to use their resources effectively and efficiently. Companies practicing managerial accounting are also able to maintain the quality of their products yet still offering reasonable price for their products. Managerial accounting differs from traditional financial accounting practice in a way that managerial accounting information is not intended to be disclosed for organization’s external people like stakeholders and shareholders, but it is practiced to supply information exclusively for the organization’s internal people such as the top management to help them in decision making and to control organization’s operations. Otherwise, financial accounting is often the published financial statements and other financial reports that are intended for the use of external people like government authorities, investors and others.
There are many benefits of practicing managerial accounting to be compared to using traditional accounting practices. The first benefit is reducing operation expenses. By practicing managerial accounting, companies is able to use the information to review and estimate the cost of economic resources and other business operations involved in the production of a particular product rather than covering the cost of the entire organization. Therefore, there will be no more problems in costing the products such as overpricing or under pricing since only the cost of the resources and operations involved in producing a particular product are taken into the calculation. Another benefit of managerial accounting practice is maximizing organization’s profitability. The use of managerial accounting tools enable organizations to reduce both operating and capital expenditures, which is by carefully monitoring each operational process involved
Nowadays, managerial accounting practice is practiced by many successful producers in Japan, Korea, China and others. Therefore, they are able to use their resources effectively and efficiently. Companies practicing managerial accounting are also able to maintain the quality of their products yet still offering reasonable price for their products. Managerial accounting differs from traditional financial accounting practice in a way that managerial accounting information is not intended to be disclosed for organization’s external people like stakeholders and shareholders, but it is practiced to supply information exclusively for the organization’s internal people such as the top management to help them in decision making and to control organization’s operations. Otherwise, financial accounting is often the published financial statements and other financial reports that are intended for the use of external people like government authorities, investors and others.
There are many benefits of practicing managerial accounting to be compared to using traditional accounting practices. The first benefit is reducing operation expenses. By practicing managerial accounting, companies is able to use the information to review and estimate the cost of economic resources and other business operations involved in the production of a particular product rather than covering the cost of the entire organization. Therefore, there will be no more problems in costing the products such as overpricing or under pricing since only the cost of the resources and operations involved in producing a particular product are taken into the calculation. Another benefit of managerial accounting practice is maximizing organization’s profitability. The use of managerial accounting tools enable organizations to reduce both operating and capital expenditures, which is by carefully monitoring each operational process involved
References: Clark, W. What Are the Benefits of Management Accounting? Retrieved http://www.ehow.com/list_6753199_benefits-management-accounting_.html Codjia, M. What Are the Benefits of Strategic Management Accounting? Retrieved http://www.ehow.com/list_6732343_benefits-strategic-management-accounting_.html Financial Accounting vs Management Accounting. Retrieved http://www.diffen.com/difference/Financial_Accounting_vs_Management_Accounting Owens, M. The Uses of Management Accounting. Retrieved http://www.ehow.com/about_5549234_uses-management-accounting.html Vitez, O. The Advantages of Using Management Accounting. Retrieved http://www.ehow.com/list_6108781_advantages-using-management-accounting.html Vitez, O. The Advantages of Management Accounting. Retrieved http://smallbusiness.chron.com/advantages-management-accounting-3983.html