Management accounting
In one sentenceA branch of accounting that gives management information for planning, decision-making and control, such as budgets, costs and profitability, without being bound to a fixed format.
Simply put
Financial statements are prepared for the bank and official bodies in a set format. Management accounting, on the other hand, answers the business owner's questions: which branch is profitable? Should I accept this order at this price? How much must I sell to cover my expenses?
Its reports are internal, look to the future as well as the past, and can be broken down as needed: by branch, item, employee or day.
Example
A restaurant owner with three branches asks for a monthly report of each branch's profit after allocating rent and salaries, compared with the budget: this is the work of management accounting.
Don't confuse it with
Financial accountingFinancial accounting serves external users with statements prepared under the standards, while management accounting serves management in whatever form is useful to it.
in FullScreen ERP
Cost centers in the system show the profitability of each branch, project or department. General accounts