What is A Management Accounting System?


A management accounting system collects financial data from business operations such as sales data, shifts in inventory and changes in raw materials costs, then converts the information to analysis reports.


  • Many different types of management accounting systems are available. Some include cost-accounting systems, inventory management systems, job-costing systems and price-optimizing systems.


  • An accounting management system takes existing operational data and creates informative reports such as sales analysis that is product- and time-specific, analysis of the cost of storing inventory before it is necessary for production, and comparisons of budgeted expenses vs. actual expenses. For example, a cost-accounting system can provide the direct and indirect cost of manufacturing a product, allowing the company to determine a price for the product that is profitable.


  • It is always a smart business decision to select a management accounting system that integrates with the company's financial accounting system. This eliminates redundancy and increases timeliness of the management reports.


  • With accurate, timely information, management can make informed decisions about operational items such as cutting costs, increasing production time, increasing on-hand inventory and increasing marketing budgets.


  • Businesses that have a management accounting system in place have a definite advantage in streamlining operations procedures, cutting costs and building the capital to afford expansion.


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