About Management Accounting?
Author Paul Kojo Asare claims “management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.”
It is often said that knowledge is power and certainly managers who are able to interpret the financial information available to them are able to forecast, plan and react to events more ably than those who haven’t learned to do so.
Managers essentially need to know how to manage cash flow, stock levels and sales in order to get a grasp of what is really happening to their businesses and the starting point for such a voyage of discovery is to take a basic bookkeeping course where the student will gain an overview of the simple processes and vocabulary involved in the financial side of the business.
For example, they’ll need to gain an overview of purchase ledger, sales ledger and even final accounts, so they can interpret a balance sheet and work with a profit and loss account.
But it would be counter-productive for non-financial managers to become too embroiled in accounting and these professionals are better advised to take a short study programme leading to a more general qualification or certificate.
After all, the key is for such managers to have practical information on which they can base business decisions rather than strictly accountancy based or tax decisions.
Such studies are usually less time intensive than those required for certified accounting qualifications.
For example, a Pitman Training basic bookkeeping course is advertised as requiring only 14 hours of study and even an Accounting Technician diploma will demand only 185 hours.
But how far should a non-financial manager go in selecting accounts training?
Well, it is certainly extremely valuable to go as far as learning final accounts in order to have an overview of the value of producing a trial balance and to be able to make sense of the balance sheet and profit and loss account.
Going further, for example taking a Sage Line 50 course for these types of managers is usually a step too far and exposes them to the risk of becoming too operational or even meddling in the affairs of the accounts department!
Imagine letting the sales manager loose on the sales ledger – it would be chaos!
Of course, many managers are too short of time to embark on studies during their long working days, so fortunately online training can help and there is a widely respected BTEC module entitled “Financial Awareness” which can be studied as a distance learning programme.
Aimed specifically at such managers, it is one of the most convenient ways for them to develop their management accounting skills outside of office hours.
It is therefore clear that successful managers need to know about management accounting in order to achieve their professional goals.
The real questions are, “what do managers need to know and how do they go about learning how to get the answers they need?”
This essay has set out to provide some answers to those questions.
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