How Do Managerial Account Practices Benefits Organizations

Topics: Management, Decision making, Cost accounting Pages: 3 (601 words) Published: September 21, 2014
How do managerial accounting practices benefit business organizations. First of all, I would like to define the definition of "Managerial Accounting". According to "", managerial accounting can be defined as "the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of the organization's goals". Meanwhile, according to "", managerial accounting is the process of preparing management reports and accounts to provide accurate and timely financial and statistical information that required by managers to make day-to-day and short term decisions. In the same line, "" relate managerial accounting is concern with the provisions and use of accounting information to managers within organizations, to provide them the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. Now we had know the definition of the managerial accounting, lets continue with the benefits to the organizations by practicing it. The first benefit is it can reduce expenses in the organizations. The companies may lower their operational expenses because through review the cost of economic resources and other business operations such as marketing and advertising activities. This information allows the companies to better understand how much money it costs to run the business. In other words, they may easily plan on how much cost to allocate in particular activities in order to minimize the cost and maximum the profit. The companies also can conduct an analysis on the quality of economic resources used to produce goods or services. If overall product quality is not suffer by using a cheaper raw material, than the companies should make changes to reduce the cost. Second, the company can improve cash flows. As we now budgets are a major part in planning the activities in a company. The companies usually use budgets for the future...

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Vitez, O. (2014). The Advantages of Management Accounting. Retrieved from
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