Question

You have seen the different types of budgets and special problems managerial accountants face each day. What are the 5 most important things you learned about the impact managerial accountants can have on the success of an organization, whether for profit or not for profit?

Answer 1

The 5 most important things we learned about the impact managerial accountants can have on the success of an organization are as follows:

Planning or helping forecast the future

Managerial accountants develop reports that are more detailed than financial accountants. They can include information about specific products, market reach and regional information. Based on the information obtained from reports such as surveys, budgets or competitor analysis, managers can set objectives and outline how they will be achieved.

Controlling

The information obtained from managerial accounting gives managers a greater sense of control over an organization's success. Since the information provided in managerial accounting reports are only used internally, they do not have to adhere to generally accepted accounting principles, or GAAP. Therefore, managers can choose what areas of the company require additional investigation and which areas can be examined later. During the controlling phase, managers examine quantitative and qualitative feedback from managerial accounting and make additional decisions.

Decision-making or help in make-or-buy decisions

Management accounting also considers how certain decisions may affect a manager's behavior. A manager makes long-term decisions that have a lasting impact, so managerial accounting is used to develop plans and convey information with the goal of improving management decisions. Budgets are an important aspect of managerial accounting, but they are not included in financial accounting because of its focus on historical data. Therefore, managerial accounting has the advantage of providing a more detailed analysis.

Problem-solving

Contrary to financial accounting, which focuses on historical reports, managerial accounting considers actual performance and compares it to goals and future outlooks. This information is used to identify issues that may arise in budgets or production changes and develop alternatives. Sometimes, the accounting information that a company currently has may not be sufficient in solving a problem, so managerial accounting gives managers the option of requesting additional information with limited time constraints.

Goal Setting

Managerial accounting helps with goal setting by making the numbers transparent. Managers can measure and note performance while setting goals and making adjustments to motivate employees with the ultimate goal of driving revenue.