Management accounts are a set of summarised accounting reports consisting of the balance sheet, cash flow and income statement. These documents are prepared every month, fortnight, or week specifically for a company’s management to provide regular key financial and statistical information which is required by managers to make day to day and short-term decisions.

Management accounting information is different than financial accounting in a number of respects. The most striking being that financial accounting reports tend to be based on historical data while management accounting reports are primarily forward looking.

Management accounting reports are usually confidential and for internal use company use only whereas financial accounting statements are reported publically. Management accounting reports are structured to cater for management’s informational needs rather than being based on Generally Accepted Accounting Practices (GAAP).

Interesting to know: Master Budget (Accounting 101)

One of the important uses of management accounting is to create a company’s master budget. A master budget is a set of various budgets such as sales, production costs, purchases, incomes and more. It also includes pro forma financial statements. The master budget serves as a planning and control tool to management.