The Managerial Accounting Process: A Comprehensive Overview

Last Updated: 13 May 2023
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Managerial accounting

Management accounting is an accounting that focuses on the cost associated with operating a firm. Sometimes management accounting is described as cost accounting which deals with the cost and expenses of the company particularly in production. The value of the management accounting for the company that produces a homogenous product like Magnum PLC concentrates on the reduction of the cost and maximization of the profits.

Therefore, an accounting technique that should be adopted by the company is a managerial accounting that aims at accounting for the company's performance and internal operations. On the other hand, financial accounting explains the financials of the company in perspective of the outsiders like an investor and corporate managers (Narayanaswamy, 2017). Laura viewpoint is based on the management accounting, which concentrates on the internal operations. The operation of the company could be enhanced if the accounting is done in a manner that the primary goals of the company are factored in the activity.

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Managerial accounting comprises of the cost accounting, accounting for raw materials and the inputs used in operation. If the objective of the company is to minimize operations cost, and then the company will seek to have an accounting system that considers several supplies and ensures the company can acquire raw material from the cheapest supplier. Also, Managerial accounting is more comprehensive with operational reports, which are only distributed within the company.

The reports circulated internal help the company makes decisions concerning the company's operations. The striking differences between financial accounting and managerial accounting are the compliance to the internal accounting system rules (Narayanaswamy, 2017). Since the consumers of the internal reports are only within the company, it does not follow a specific format and can be tailored by the company accountant to suits the operation of the company.

On the other hand, financial accounting is based on the reporting the information of the company to the auditors and investors. Therefore, the financial accounting system cannot be altered but can only be adopted as per the strict international rules of the accounting system. Therefore, Laura's viewpoint of enhancing accurate management accounting is acceptable by valuing managerial accounting concerning internal operations.

Therefore, Laura's viewpoint on the value of managerial accounting is based on the internal needs of the company. The company needs the internal accounting system that monitors internal operations. The benefits of the managerial accounting are, company's cost is recorded and managed, work in process operations are communicated internally, analysis of internal constraints, capital budgeting, trend analysis and product valuation.

In comparison with financial accounting which reports merely periodic financial information such as balance sheet and income statement, managerial accounting information aids in the management of daily operations of the company. The role of the managerial accounting concerning trend analysis and forecasting of the production of goods and services within the company is to generate reports that assist in decision making in short run (Benallou and Aboulaich, 2017).

Subsequently, budgeting and allocation of the resources within the company will be possible with trend analysis of the inputs and outputs. Some of the operations that demand information to be effected such as output valuation can be done if the managerial accounting information is utilized. Therefore the final prices and value of the products are aided by the managerial accounting. Consequently, managerial accounting is useful in internal decision making and equally crucial in holistic value addition of the accounting system of the company.


  1. Benallou, O. and Aboulaich, R., 2017. Improving Capital Budgeting Through Probabilistic Approaches. Review of Pacific Basin Financial Markets and Policies, 20(03), p.1750018.
  2. Narayanaswamy, R. (2017). Financial accounting: a managerial perspective. PHI Learning Pvt.Ltd.

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The Managerial Accounting Process: A Comprehensive Overview. (2023, May 13). Retrieved from

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