What is A Management Accounting System?

by Kaye Morris; Updated September 26, 2017

A management accounting system collects financial data from business operations such as sales data, shifts in inventory and changes in raw materials costs, then converts the information to analysis reports. (see reference 1)

Types

Many different types of management accounting systems are available. Some include cost-accounting systems, inventory management systems, job-costing systems and price-optimizing systems.

Features

An accounting management system takes existing operational data and creates informative reports such as sales analysis that is product and time specific, analysis of the cost of storing inventory before it is necessary for production, and comparisons of budgeted expenses versus actual expenses. For example, a cost accounting system can provide both the direct and indirect cost of manufacturing a product allowing the company to determine a price for the product that is profitable.

Considerations

It is always a smart business decision to select a management accounting system that integrates with the company's financial accounting system. This eliminates redundancy and increases timeliness of the management reports.

Benefits

With accurate, timely information, management can make informed decisions about operational items such as cutting costs, increasing production time, increasing on-hand inventory and increasing marketing budgets.

Potential

Businesses that have a management accounting system in place have a definite advantage in streamlining operations procedures, cutting costs and building the capital to afford future expansion.

About the Author

Kaye Morris has over four years of technical writing experience as a curriculum design specialist and is a published fiction author. She has over 20 years of real estate development experience and received her Bachelor of Science in accounting from McNeese State University along with minors in programming and English.