It is common for us to talk about a company's accounting to refer to financial management, but in reality, there is not just one accounting. There is administrative, financial and management accounting.

With financial accounting it is not enough, you need a tool that breaks down the relevant information and that is where management accounting comes into play, adding information so that you know everything you need about your business or company, from stocks to inventory control. management, through calculating the costs of all services, activities and products. 

Advantages of Management Accounting

Among the main advantages of management accounting are:

• This type of accounting allows knowing the accounting and financial aspects of a company in a detailed way. Therefore, in short, to know more and better the integral management of your company.
• Facilitates decision making. The fact of obtaining the data, practically, in real time is a competitive advantage for the company since the state of finances and their possibilities are known at all times.
• More control and planning over resources, both material, human, and economic. It helps to detect possible errors quickly and, therefore, solutions can be provided when there is still time.

Hence the importance of management accounting or executive accounting, which helps the company to collect financial and non-financial information, classify it, order it and present it to improve decision making, control, planning and general management of the society. Even so, there are many companies that still do not have an established management accounting model because they consider that the benefits it brings are less than the cost of resources it entails.

Management Accounting Classification

Although cost accounting is a fundamental part of management accounting, there are major differences between these two processes. Management accounting could be said to be classified into two types:  analytical accounting and decision making . Well, cost accounting is a part of analytical accounting.

This is where we find the first differences, since a company can carry out cost accounting without the need for management accounting. However, management accounting needs a broader approach, so it is not possible to carry it out without having cost accounting.

Similarly, the tools used to measure both accounts are not the same. Management accounting is served by one that contributes to decision making, such as the Balanced Scorecard. Costs, on the other hand, can be calculated from budgets, for example.

Similarities Between Management Accounting and Cost Accounting

Both types have aspects in common despite the differences:

• These are processes for internal use. That is, they are focused on management, planning and decision-making within the company and are not used outside of it.
• These are two processes that are not mandatory, but companies can decide to carry them out voluntarily.
• With regard to the data provided, these do not have to be exact in either of the two accounts. Both may be subject to oscillations derived from different variables. For management accounting, these fluctuations serve to make future predictions.
• Both one and the other prevent events that have not yet occurred.
• Both are very important for companies as they help managers make decisions at the highest level.
• Accounting paths are focused on planning, management and decision making within the company.
• They are complementary. Although management accounting groups costs by responsibility, products, activity, projects or function, cost accounting provides a permanent inventory that improves this economic information.

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