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What Is Managerial Accounting?

When accountants look at the books, they are interested in accuracy, so when a manager looks at the finances, they can assume everything is accurate and the sheets are balanced. What the manager is looking for is information that will help him or her make decisions about running the company.

Likewise, a managerial accountant is crunching numbers in order to advise executives on how to run the company. How risky is each available option when making important decisions? Can the company afford to expand the product line right now? How many workers can they afford to hire, and how much more profit will the company gain from expanding production?

Considering the bottom line is part of most decision-making processes. That is why nearly every online MBA program teaches managerial accounting concepts.

If You Want to Run a Company, You Will Need to Know Managerial Accounting

Suppose you are a visionary leader with an uncanny ability to spot trends, develop markets and hire the best people to make your company run in the most efficient manner. If you do not have a grasp of the basic managerial accounting concepts, there is a problem. If you do not have the skills to understand a balance sheet and apply forward-looking theories to the financial situation of your company, you may struggle in the business world.

What Exactly Is Managerial Accounting?

Let’s say you have a “what if?” situation at your company. The CEO wants to know what would happen if the company opened up a new production facility in Mexico. If you remember managerial accounting concepts, you might be able to provide the answer. You would have learned to project scenarios based on the current conditions at your company and coming up with realistic end results, almost like predicting the future of your company.

Managerial accounting courses teach you how to apply financial insights gained from the accounting function to a company’s decision-making function. Given that successful managerial accountants play a key role in guiding a company’s strategic decisions, it is easy to see why managerial accounting concepts are part of the core curriculum of most online MBA programs.

Learn more about the FIU online MBA program.


Sources:

Houston Chronicle: Why Management Accounting Is Important in Decision-Making

The Guardian: Careers in Management Accountancy: It’s More Than Just Number Crunching


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