Does management accounting is very important in an organization?why?
Management accounting analyses the financial results of an organisation so the management can understand how the organisation has been operating. Sales revenue is broken down by product and by geographical area. Operating costs are broken down into the main different elements. Overheads are broken down into the main components. These results are compared to previous periods and the budget. Management accounting is the main way the management of a company can understand what has been happening to the company for past periods. Usually an updated forecast for the next few months and/or for the full year will also be produced. By understanding what has happened in an organisation management can take action to correct problem trends which is why management accounting is so important to an organisation.
