INFORMATION OF MANAGEMENT

i get admission in ACCA but i dnt no about it

Think of why do we need management accounts?It is not produced for shareholders,it is produced to help management in planning,control and also performance management.In management accounting,we also take into account the non-financial information and external information such as customer’s complaint/feedback,reputation for different products and so on,because these information can aid management in deciding which products are more profitable and which are loss-making.Well of course,there is no law stated that a company must produce management accounts because government would never want to know about your business’s management accounts,government is only interested in financial accounts because tax payables are based on financial accounts’ profit,therefore no legal requirement for management accounting.When you are doing management accounting,do you notice that there are no specific format for you to follow,not like income statement where you start from sales less cost of sales less expenses,the decision for formats in management accounts is discretion.Finally in management accounting,we do not look at past data,we only need current and future data because planning needs forward looking,not looking at what is already past,financial accounting is different as you can see when you prepare income statement,the information given in the questions are already happen such as sales for the period.In conclusion,management accounting is very different from financial accounting,it is very important to differentiate both of these especially in basic paper like F2,I had fully explained,hope it will help your understand 🙂