Management accounting and its role in the enterprise

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business.

The reports generated by various streams of accounting, such as cost accounting and management accounting, are invaluable in helping management make informed business decisions.

Financial statements are the final result of accountant activity. In the financial statements a large company's operations, financial position and cash flows over a particular period are summarized.

However, in addition to financial accounting, with the main purpose to make financial reports, there are other types of accounting.

They include tax accounting, financial accounting, management accounting and cost accounting.

Tax accounting is a structure of accounting methods focused on taxes rather than the appearance of public financial statements. Tax accounting is the means of accounting for tax purposes. It’s applicable to everyone — individuals, businesses, corporations and other entities. Even those who are exempt from paying taxes have to participate in tax accounting. The purpose of tax accounting is to manage tracking funds associated with individuals and entities.

Financial accounting refers to the processes accountants use to generate the annual accounting statements of a firm. Management accounting uses much of the same processes but utilizes information in different ways. Namely, in management accounting, an accountant generates monthly or quarterly reports that a business management team can use to make decisions about the business operations.

Managerial accounting, also known as cost accounting, is the process of identifying, measuring, analyzing, interpreting, and communicating information to managers in pursuit of an organization's goals. The key difference between managerial and financial accounting is in the fact that managerial accounting information is aimed at helping managers make decisions within the organization, whereas financial accounting is aimed at providing the information to parties outside the organization.

Just as management accounting helps businesses make decisions about management, cost accounting helps businesses make decisions about costs. It’s essential that cost accounting considers overall production costs. Analysts, managers, business owners and accountants use this information to determine the product price. In cost accounting, money is considered as an economic factor in production, whereas in financial accounting, as a measure of a company's economic performance.

For successful business development it is important to use management accounting methods.

Enterprises need to create a system of management accounting to provide managers with useful information necessary for making effective management decisions.

Russian enterprises are less likely to use management accounting methods as compared to foreign enterprises as they consider them redundant

Despite the obvious advantages of introducing the management accounting system and the importance of the analytical data obtained in its management, in many Russian enterprises it remains unclaimed.

That may be explained by:

• 1.    Misunderstanding by the majority of managers of domestic enterprises of the need to implement a management accounting system.

• 2.    The extra cost of organizing a management accounting service.

• 3. The lack of standards and methodological base of management

• 4. The lack of highly qualified staff in the field of management

• 5.    Lack of management accounting information support system.

accounting and management reporting.

accounting.

Methodical aspects of the implementation of management accounting are closely related to the industry-specific activities of an enterprise.

It is necessary to form management service as an integrated interpenetrating system to ensure the efficiency of enterprises

Management accounting is necessary to ensure the sustainability and profitability of enterprises, which in modern conditions are highly susceptible to negative economic trends.