Internal Focus:
- Managerial accounting is primarily used for internal decision-making within a company. It helps management plan, control, and make informed decisions about the business’s operations.
Future-Oriented:
- Unlike financial accounting, which looks at past performance, managerial accounting often focuses on forecasting and budgeting to guide future decisions.
Detailed Information:
- Provides detailed financial and non-financial information about various departments, products, and processes, allowing managers to analyze the performance of specific areas.
Flexibility in Reporting:
- Reports in managerial accounting are customized for the specific needs of the organization. They do not have to adhere to external standards like GAAP or IFRS.
Cost Analysis:
- Involves analyzing costs to determine pricing, budgeting, and controlling expenses. Techniques like cost-volume-profit analysis and break-even analysis are often used.
Decision-Making Support:
- Managerial accounting assists in decision-making by providing data for pricing decisions, cost control, budgeting, and performance evaluations.
Performance Evaluation:
- Helps assess business performance using metrics like variances between actual and budgeted figures, return on investment (ROI), and economic value added (EVA).
Non-Financial Information:
- Besides financial data, managerial accounting also considers non-financial information, such as customer satisfaction and employee productivity, which help in making operational decisions.
