What is management accounting?

CPA HCM will give you an example like this to easily visualize everyday realities. Currently, there are many businesses, agencies and organizations operating in the economy. These organizations may differ in role, model, mission or goals. However, any organization will have two main characteristics:

• Feature 1: All organizations have specific operating goals and operating strategies. For example, maximize revenue, minimize costs and maximize profits.
• Feature 2: Management goals, every manager needs information to operate and control the organization's activities. Depending on the scale of the organization's operations, the amount of information will be more or less proportional.

So, the question here is how can managers capture information and make the most effective financial decisions? At that time, administrators will build an accounting information system for the organization to serve the control of corporate governance decision-making activities. At that time, the role of corporate accounting was born.

1. Concept.

Management accounting is the field of accounting that focuses on providing financial information and analysis to managers within an organization to assist in decision making, planning and control. It provides detailed information about the business activities of the enterprise, more or less influencing final and effective decision making.

There are two types of information that management accounting will provide including: Financial information and non-financial information. All of this information is collectively known as management information. The information provided is not simply financial information. Before providing information, management accountants need to know and understand the purpose of that information.

2. The role of management accounting for business administrators.

Management accounting is an important tool for managers to better understand the current financial situation of the business, analyze costs and profits, manage risks and make quick decisions. as most effective. It helps managers evaluate the effectiveness of business activities, find new opportunities and optimize processes and resources. Management accounting also helps businesses ensure compliance with legal regulations related to finance and taxes.

The decision-making process for business operations can be described in the following steps:

• Planning: Business directors always have clear business plans at the beginning of each fiscal year and their overall goal is to bring the company to its desired revenue targets. The plan will be associated with short-term, medium-term and long-term goals. When planning, business administrators need to link all identified goals.

• Organization: Operational work: In organizing, the administrator will decide how to best link the organization, people and resources together so that the plan is implemented most effectively. In operations, managers oversee daily operations and keep the organization running smoothly.

• Control: After having a plan and organizing its implementation, executives are the ones who must check and evaluate the planned actions. To perform the inspection function, they use the necessary work steps to ensure that each department as well as the organization follows the outlined plan. This comparison will show at which stages the work performed is not satisfactory and needs adjustment to complete the established tasks and goals.

• Make decision: This is about making rational choices among different options. Decision making is not a separate function, it is an important function, a process throughout all stages of organizational operations, from planning, implementation to inspection and evaluation. The decision-making function is continuously applied throughout the business's operations.

The role of management accounting in businesses

The number 1 role of a management accountant is to collect and provide appropriate and quick information to administrators so they can operate, control organizational activities and make decisions.

The production director often outlines plans and makes decisions on production options and schedules, while the marketing director makes advertising, promotion and product pricing decisions. The CFO makes decisions such as raising capital and investing. In general, for each goal, managers need information to make decisions. Management accountants will provide useful information to senior levels in the business. A requirement for management accountants is that they must understand managers' decision-making situations.

Summary

Management accounting has been playing a very important role in the business operations of enterprises. All the information they provide will be a core factor to help managers plan the work of supervising and operating the business in the most effective way. New trends have formed and change is necessary to pose great opportunities and challenges for accountants.

Currently, CPA HCM is offering new training courses for accountants who want to improve their skills or for new graduates who want to gain more skills to help them find a job. simpler. Reference link here: https://cpahcm.com.vn/khoa-dao-tao 

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