Knowra Management accounting Management accounting Management accounting prepares and uses financial and nonfinancial information to help managers plan, control operations, and make organizational decisions.
Budgeting : The process of planning future income, spending, and resource use in quantified terms. Budgets translate management plans into targets for allocating resources and monitoring results.
Cost accounting : The methods used to measure and analyze the costs of products, services, activities, and processes. Cost records supply a core input for internal planning and operational decisions.
Financial accounting : The preparation of financial statements for external users under applicable reporting standards. Its external reporting purpose contrasts with management accounting’s internal decision focus.
Scientific management : An approach to organizing work through systematic measurement, task analysis, and standardized methods. Its emphasis on measuring work helped create demand for detailed internal cost information.
Activity-based costing : A costing method that assigns overhead costs to products or services through the activities that consume resources. It traces indirect costs more precisely when managers need to compare products or processes.
Standard costing : A costing system that compares actual costs with predetermined costs for expected conditions. Predetermined cost standards provide benchmarks for management control and variance analysis.
Cost behavior : The way a cost changes, or remains fixed, as the level of activity changes. Understanding cost behavior helps managers predict the effects of output and capacity decisions.
Industrial Revolution : A period of major technological and economic transformation that began in Britain in the eighteenth century. Factory production and larger enterprises expanded the need to track costs and coordinate operations.
Variance analysis : The comparison of actual results with planned or standard amounts to identify and investigate differences. Managers use variances to locate departures from budgets and operating expectations.
Responsibility accounting : A system that reports revenues, costs, and other measures according to managers’ assigned areas of responsibility. It links reported performance to the units and decisions managers can influence.
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