Managerial Accounting - Definition, Objectives & Techniques

Managerial accounting also known as management accounting can be defined as the process of providing resources and financial information to managers to help them in taking decisions. The accounting method is only performed by the internal team members of the company and because of this reason, it is considered different from financial accounting. The purpose of managerial accounting is to use it for the internal purpose of the organisation. It is one of the basic accounting that is studied by finance students. With this to develop the understanding and working of managerial accounting, different managerial accounting assignments are provided to students by the professors as the subject of business management it is one of the most important topics to be studied. In last in this article, we will learn about what managerial accounting is, its objective and its techniques.

Introduction of management accounting

Management accounting can be defined as the application of professional knowledge and skills used in the making of financial and accounting information in a way which it will help the internal management of the company in planning, controlling and formation of policies for the functioning of the company. The general and basic function of managerial accounting is to help the management in taking decisions. The need for management accounting is only for serving the managers in taking the decisions for the organisation. Management accounting is used for the purpose of effective management. With this some of the definitions of managerial accounting are mentioned below:

According to the author R.N. Anthony, “Management accounting is connected with accounting information that is beneficial to management.”

Similarly as per American Accounting Association, “Management accounting includes the concepts and methods that are important for effective planning for selecting among other business actions and for control through the interpretation and evaluation of performances.

With this from the above-mentioned definitions we can state that management accounting is that part of accounting that provides the required information to the managers that is used by them for planning, controlling and making decisions for the company.  

Objectives of managerial accounting

The key purpose and objective of managerial accounting can be summarized as under:

Formation of planning and policies

Planning can be defined as the process of deciding what is to be done in advance. Managerial accounting helps the organisation in effective planning as it provides statistical and costing data to managers that can be used in setting the goals and formation of future policies in the organisation.

Decision making

The techniques of management accounting like budgetary control, cost-volume-profit, capital budgeting, etc. help managers in taking decisions for the organisation. With this, through the use of it managers solve their different management problems.


One of the key functions of management accounting is showing the present position of the company to managers so that they can take timely decisions. By providing data and information from different departments, managerial accounting helps the top managers in knowing the performance of the organisation. 

Coordinating operations

Managerial accounting helps managers in controlling the performance of the organisation. In this, the actual performance of the company is compared with the standards, budgets, and operating plans and deviations are stated to the managers so that the right measures can be taken.

Objectives of managerial accounting

Techniques of managerial accounting

To assist the managers, managerial accounting uses many cost accounting and financial techniques. With this to achieve the decided goals of the business managerial accounting used different techniques. Below we have mentioned some of the techniques used in managerial accounting:

Financial planning

For any business to start or operate it requires finance. The process of financial planning includes the formation of both short-term and long-term financial objectives for the company. To raise the funds every company is required to think about its source. The funds of the company can be raised by taking loans or issuing shares. In this again discussion is taken for the type of capital.

Managerial analysis

The managerial analysis primarily deals with the advantages of an increase in production. The process of it includes the calculation of break-even points which needs to know the contribution margin of the sales mix. Here sales mix can be defined as the quantity of a product that the company has sold compared to the whole sales of the company. This value is used by managerial accounting to define the price points for different products.

Trending analysis and forecasting

Trending analysis and forecasting deal with the distinctions in product costs. The resulting data is useful in knowing the rare patterns and finding effective ways to resolve and identify the basic matters.     

Capital budgeting

Capital budgeting considers the analysis of information in order to make decisions that are connected to capital expenditure. Under this process, managerial accounting calculates the internal rate of return and net present value to help the company managers in taking decisions for capital budgeting like the calculation of the accounting rate of return or payback period.

Valuation of inventory and product costing

This technique deals with identifying the actual price of goods and services. The process of it generally includes the calculation of overhead charges and assessment of direct prices that are associated with the price of goods sold.

Constraint analysis

Managerial accounting observes the restraints of cash flow and profits with esteem to the product. It studies the problems caused by bottlenecks and measures their impact on cash flow, revenue and profit.

Techniques of managerial accounting


Managerial accounting helps the company in analysing and recording the financial information which is used by the company for increasing its productivity and efficiency. With this, if you are facing difficulty in doing your managerial accounting assignment, contact Treat Assignment Help UK


What is the role of managerial accounting techniques in management accounting?

Managerial accounting techniques are used in taking short-term and long-term decisions for the company that involves its financial health. Through this managers make operational and functioning decisions that help in increasing the efficiency of the company and making long-term investment decisions.

Definition of managerial accounting in simple words?

In simple words, managerial accounting can be defined as the process of gathering and analyzing the financial information of the business as well as related data and making reports for internal management. The purpose of this accounting is to guide and support the operational and planning activities of management. 

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