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Starting up in business: Uses of management accounting

Management accounts will enable you to:

  • Compare your accounts with original budgets or forecasts
  • Manage your resources better
  • Identify trends in your business
  • Highlight variations in your income or spending which may require attention

They should be used for the following:

Record keeping

  • Recording business transactions
  • Measuring results of financial changes
  • Projecting financial effects of future transactions
  • Preparing internal reports in a user-friendly format

Planning and control

  • Collecting cash
  • Controlling stocks
  • Controlling expenses
  • Co-ordination and monitoring of strategy/performance
  • Monitoring gross margins

Decision making

  • Using cost information for pricing, capital investment and marketing
  • Evaluating market and product profitability
  • Evaluating the financial effect of strategies and plans

The importance of maintaining accurate accounts 

 

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