Students studying the language of business are often drawn to the specialty field of management accounting to help drive successful corporate growth. In short, management accounting is focused on preparing timely financial records for business executives so that they can make well-informed daily managerial decisions impacting company finances, according to the Chartered Institute of Management Accountants. Also referred to as cost accounting, management accounting involves producing statistical data and reporting directly to an organization’s internal stakeholders. Management accountants play an important role in calculating sales revenue, accounts payable, expenditures, and other budgeting numbers. Managerial accounting serves the purpose of identifying, assessing, interpreting, and communicating the company’s financial health to meet objectives.
Management Accounting vs. Financial Accounting
It’s important that you understand the key differences that separate management accounting from its similar twin, financial accounting. Firstly, financial accounting is different in that it focuses on preparing statements to show a company’s cash flow to external parties, such as investors, lenders, stockholders, and financial analysts. Management accounting does the opposite to send periodic reports solely to internal company executives. Another major difference is that financial accounting is based on historical financial data on past transactions or statement changes. Management accounting is forward-looking in nature to determine ways the organization can improve on their finances. Unlike financial accounting reports, managerial accounting records are also typically confidential and not circulated to the public.
Management Accounting Career Options
As the Bureau of Labor Statistics predicts steady job growth in accounting by 13 percent before 2022, there’s a high demand for graduates to enter several of the different career options offered in management accounting. Most entry-level workers will start as cost accountants, budget analysts, internal auditors, or cash management accountants to analyze their company’s financial status. With more experience, it’s possible to move into mid-level management accounting jobs, such as financial analyst or accounting manager. They’re given supervisory responsibilities in overseeing the development of the company’s master budgets for executives. At the upper level of management accounting, professionals can work as corporate controllers or advance as the Chief Financial Officer (CFO) to be stewards of the company’s overall assets.
Qualifications to Work in Management Accounting
Before leaping head-first into management accounting, you’ll need to have at least a bachelor’s degree from an accredited business school. Most aspiring managerial accountants will obtain their undergraduate major in accounting, but finance, business administration, statistics, or economics could also be applied here. For promotion to more senior-level positions, it’s becoming more essential for management accountants to obtain a master’s degree. Choose to earn the Master of Accountancy (MAcc) or a Master of Business Administration (MBA) with an accounting specialization. From there, you can expand your credentials further by applying to become a Certified Management Accountant (CMA), according to the Institute of Management Accountants. You’ll need to have a bachelor’s degree, complete two years of continuous management accounting experience, and pass the 100-question certification examination.
Related Resource: Financial Accounting
Overall, those working in management accounting use the story behind numerical data to help company executives form business decisions that maximize profit and minimize risk. Management accounting is helpful for managers to effectively compare their budgeted figures with actual revenue or spending to pinpoint how the company is performing. If you make the decision to specialize in management accounting as a CMA, you’ll have the rewarding chance to work inside corporations in any industry to help manage cash and reach optimal growth.