Managerial Accounting

Managerial accounting, or
management accounting, is a set
of practices and techniques
aimed at providing managers
with financial information to help
them make decisions and
maintain effective control over
corporate resources. For
example, managerial accounting
answers such questions as:
What is the company's average
cost per unit of labor
(enterprise wide or within
specific departments)?
How many dollars in sales does
each marketing dollar bring in?
What is the required rate of
return to make a new investment
worthwhile?
Which activities require the
greatest expenditures and which
earn the greatest profits (and
how can the organization
maximize the former and
minimize the latter)?
Managerial accounting
procedures are intended
primarily to supply knowledge to
decision makers within an
organization. Financial
accounting, in contrast, is
concerned with providing
information to stockholders,
government agencies, creditors,
and others who are outside the
organization. A corollary of that
difference is that financial
accounting procedures generally
must conform to external
standards, such as those
developed by the Financial
Accounting Standards Board
(FASB), while management
accounting methods are left
almost completely to the
discretion of individual
organizations.