Management accounting is concerned with providing internal information regarding a company's cost structure to corporate management. Management uses this information to make short- and long-term plans and to evaluate the performance of the company in light of those plans.
The recent trend toward globalization, made possible by advances in technology, means that the role of the managerial accountant has become more complex than it was in the past. Where managerial accountants were formerly concerned with internal information, they must now take into account changes in the world's economies, politics, social upheavals and other events that could affect the company' operations throughout the world.
In order to meet these new obligations, managerial accountants must develop new sources of information that may not have previously been important. These can include government officials, counterparts at other firms in other countries and similar industries, and staying abreast of current affairs. The end result is that the globalization of the market has led to an increasingly complex, and rewarding, opportunity for managerial accountants.
Management accounting can be defined as the process of accumulating accounting and other quantitative information and interpreting and periodically reporting this information to management in a manner that will assist management in planning and controlling the operations of a firm. This is in contrast to financial accounting, which involves the preparation and dissemination of periodic financial reports concerning the operations of a firm to groups that are not part of the company's management. These groups include stockholders, creditors, regulatory agencies and government tax departments. These types of reports are usually called external financial reports, and the preparation of these reports is standardized throughout the business world.
The primary focus on managerial accounting, ther...