Definition and Meaning of Management Accounting

The Institute of Management Accountants (IMA) describes management accounting in the following statement:

“Management accounting is a profession that involves partnering in management decision-making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy”.

“Management accounting is the presentation of accounting information in such a way to assist management in creation of policy and day-to-day operation of an undertaking.”

This means that management accounting is concerned with that accounting information that is useful to the management of an organization. That is the accounting procedure which facilitates effective decision-making is termed as management accounting.

So, it is concerned with accounting information that is useful to management. Management accounting’s latest research was started since 1950 and after 60 years, its research has reached at the top-level and financial statement analysis, ratio analysis, fund flow analysis, cash flow analysis, working capital analysis, investment analysis etc. are its main technique to analyze company and its income and financial position and on these basis, management takes the decision whether company invest his money in that particular company or not.

 

In simple words, any form of accounting enables business to be conducted more efficiently can regarded as management accounting.

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