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Management accounting, or managerial accounting, is the use of accounting techniques for business analysis to support strategy formation, business execution, decision making and risk management. It includes both analysis of financial and non-financial measures. It should be noted that management accounting is generally considered a separate practice from financial management functions such as controlling a team budget.The following are considered fundamental techniques of management accounting:
Activity Based CostingActivity based costing is an accounting approach that assigns cost to activities based on their resource usage. Activities can then be related to products, services and projects.Cost Benefit AnalysisCost benefit analysis is a general term for comparing the costs of a business strategy with its anticipated results.A brute force method of data analysis that tries to match known statistical models to large sets of data. At risk of finding patterns that are meaningless noise.
The analysis of a large repository of data to find meaningful patterns of information. Typically starts with a hypothesis that you want to confirm with data.Demand ForecastingDemand forecasting is the practice of predicting the market demand for a product or service.ForecastingForecasting is the process of making future predictions based on analysis of past data and trends using informal techniques such as educated guesses or formal methods such as statistical analysis.
Lifecycle Cost AnalysisLifecycle cost analysis is the process of evaluating costs over the life of an asset.Net Present ValueNet present value is a metric for evaluating strategies and investments that considers the time value of money.Time Value Of MoneyA principle that states that time has an impact on the value of assets.Rate Of ReturnThe gain or loss on an investment over a period of time expressed as a percentage.
The use of probability distributions to solve problems or make predictions.Statistical ModelA probability distribution constructed to support data analysis.Statistical PopulationA set of observations that share a set of properties. For example, the set of all coffee drinkers in Japan.Probability DistributionA function that predicts the results of a set of experiments over a large sample space.
A management accounting approach that focuses on the throughput of cash.Theory Of ConstraintsA management approach that examines the constraints that are holding an organization back.The process of identifying and clearing constraints commonly known as bottlenecks that limit the output of an organization, process or procedure.
Total Cost Of OwnershipA financial estimate that seeks to determine the full cost of an investment over its lifetime.Cost To CompanyThe total annual cost of an employee.Variance AnalysisVariance analysis is a tool of financial control that evaluates the difference between actual costs and budgeted, planned or standard costs.A statistical method of investigating the relationships between variables. For example, regression analysis can be used to plot the relationship between two variables on a graph.|
| Type | | | Definition | The practice of measuring management objectives. | | Related Concepts | |
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