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What is Managerial Accounting?

By DeVry University

November 17, 2023

5 min read

Managerial accounting, which is also called management accounting, is a branch of accounting that may not be as well-known as public accounting but plays an indispensable role in the success and profitability of businesses.

In this article, we will describe the duties and responsibilities of the managerial accountant, take a look at some of the education you’ll need to prepare to pursue this career and peek at the projected job outlook as we answer the question: What is managerial accounting?

Managerial Accounting Responsibilities

Before we describe the duties and responsibilities of the managerial accountant, it’s important that we understand how managerial accounting works. Unlike public accounting, managerial accounting involves the internal activities of a company’s financial operations. Managerial accountants use information related to the cost and sales revenue of the goods and services their companies sell. Cost accounting is a subset of managerial accounting that focuses on capturing the company’s total costs of production, allowing the business to identify and reduce excessive spending and maximize its profits.

What’s the difference between managerial accounting and other types? The distinction here lies in the intended users of the information being gathered, reported and analyzed. In financial accounting, for example, information is collected with the purpose of providing it to external parties, such as shareholders, lenders and regulatory authorities. In managerial accounting, financial information is gathered, analyzed and shared with managers within the organization to help them make effective business decisions.   

The tasks of a management accountant may include:

  • Planning and accounting: Management accountants plan accounting systems that cover costs, sales forecasts, profit, production planning and allocation of resources. These systems should include capital budgeting, short-term and long-term financial planning and the procedures to implement these plans effectively.

  • Controlling: Through the use of standard costing, accounting ratios, budget control, revenue and funds flow statements, cost-cutting initiatives and other methods, management accountants assist in the control of a company’s performance.

  • Reporting: In the event of unfavorable events or operations, management accountants assist top management in uncovering the cause of the problem and the parties who may be responsible and reporting them.

  • Financial evaluation and interpretation: Management accountants analyze data and present it to management with a non-technical approach, along with their own opinions and insights, so execute leadership and other stakeholders can make well-informed decisions. 

Managerial Accounting Skills

Managerial accountants share many skills with professionals in other accounting careers. To be effective, they need to be skilled in several areas that reflect the key functions of their roles as they analyze events and operational metrics and translate data into information to be used in decision making by upper-level management.

  • Analysis: Margin and constraint analyses allow managerial accountants to make calculations related to their company’s profitability. Margin analysis is a fundamental technique concerned with the benefits of optimizing production and calculating the breakeven point that determines the optimal sales mix for the company’s products. Another side of the same coin, constraint analysis identifies bottlenecks and the inefficiencies behind them that could negatively impact the company’s revenue-generating and profitability potential.   

  • Budgeting: In capital expenditure analysis, managerial accountants calculate the net present value (NPV) and internal rate of return (IRR) of a project or investment to help managers make decisions regarding new capital budgeting.  

  • Valuation and product costing: Inventory valuation allows managerial accountants to identify and analyze the actual costs of their company’s products and inventory, and accurately assess the direct costs related to the cost of goods sold (COGS).

  • Forecasting: Through trend analysis and forecasting, managerial accountants can identify patterns and trends associated with product costs, recognize variances and understand the reasons why those variances are occurring.   

Managerial Accounting Education Requirements

The journey to a career in accounting begins with education. According to occupational outlook data from the U.S. Bureau of Labor Statistics (BLS), accountants and auditors typically need a bachelor’s degree in accounting or a related field, such as business, to enter the occupation. The BLS further notes that some employers prefer to hire candidates with a master’s degree in accounting or business administration, and that accounting students may gain practical experience through internships with public accounting or business firms.

If you’re preparing to pursue a career in managerial accounting, we can help you with several different types of accounting degrees and certificate programs at the undergraduate and graduate levels. Our academic lineup includes a Graduate Certificate in Accounting Certification Preparation. When you choose the Certified Management Accountant (CMA) Exam Preparation emphasis, a dedicated 3-course sequence will help you prepare for the CMA exam.

Management Accounting Job Outlook

According to the BLS, a growing economy, the continuing globalization of business and a complex tax and regulatory environment are expected to be factors in the continued strong demand for accountants and auditors.

The BLS projects employment of accountants and auditors to grow steadily at 4% from 2022 to 2032, with about 126,500 job openings for these professionals expected each year, on average, over the decade.1 This growth is projected on a national level and local growth will vary by location. This projection is not specific to DeVry University graduates and may include earners at all stages of their careers.

The BLS further notes that technological change is expected to affect the role of accountants over the next decade, with increasingly widespread use of technologies such as artificial intelligence. Rather than reducing overall demand for accountants, technology will make their work more efficient. The automation of routine tasks, such as data entry, will instead make accountants’ advisory and analytical duties more prominent.

Prepare to Pursue Your Career in Managerial Accounting

Put your knack for numbers to work and help businesses thrive in the competitive global economy as you prepare to pursue a career in managerial accounting.

At DeVry, our Bachelor’s Degree in Accounting can give you a strong foundation in accounting and economics, and a thorough understanding of business technology, government laws and regulations, business administration and management, and may help you prepare you to advance your accounting education in pursuit of a graduate-level degree or CMA certification.

Online learning here at DeVry can help you balance your commitment to education with work, family and other aspects of your busy life. Classes start soon. Let’s talk about getting you started in our next session.

1 https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm Growth is projected on a national level and local growth will vary by location. Projection is not specific to DeVry University graduates and may include earners at all stages of their careers.

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