What is Management Accounting?

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When selecting a career path in the accounting sphere, you have numerous options based on the area of finance that interests you most. There is more than one way to work as an accounting professional and thus many possible outcomes after earning a degree in accounting.

For instance, while public accounting is the most commonly known part of the profession, you may be wondering: What is management accounting? Management accounting is the process of analyzing corporate financial information and passing it along to other departments to help them make business decisions. While managerial accounting is different from public accounting in its everyday tasks and structure, it uses many of the same skills, from detail-oriented financial analysis to scrupulous professional ethics. Taking such a role is one way to make an accounting education pay off.

A management accountant presents data to executives.

What do management accountants do?

Management accounting, also known as cost accounting, involves a day-to-day workload made up of projects designed to help companies determine their overall strategies. Rather than working with various clients on a consulting basis, these accountants are typically full-time salaried employees of single organizations.

The U.S. Bureau of Labor Statistics notes management accountant duties can include budget work and performance evaluation. They analyze financial information to determine the best course of action. In addition to laying out cost projections and recommendations, they may work on investment strategies. When it comes to buying stocks, bonds, and other elements of companies’ portfolios, these accountants work closely with financial managers.

Management accounting is a role concerned with strategic decision-making, using financial data to inform business direction. Therefore, PayScale notes the value of leadership experience for these professionals. People who have made decisions about a company’s strategy and priorities will understand upper management’s point of view when delivering accounting and financial information.

What are the characteristics of management accounting information?

The data that emerges from financial accounting teams should be comprehensible by people outside of financial roles. Management accounting focuses on projects of strategic importance to companies as a whole. Important functions such as risk management, cost analysis, and budgeting are only effective if their impact is immediately understood and actionable.

When leadership comes to management accountants with a business problem, it’s up to accounting personnel to deliver relevant reports derived from financial statements and other internal information. Whether the management accountants prepare this information themselves or lead a team will likely depend upon the size of the company, according to Investopedia. Management accounting at small firms is more likely to involve hands-on number-crunching.

How does management accounting differ from financial accounting?

Many of the skills associated with managerial accounting are the same as those used in other branches of the accounting profession. Investopedia notes generally accepted accounting principles (GAAP) are fundamental knowledge in these departments. Tax system knowledge and an understanding of processes such as cash flow are also important.

Where the roles differ is in their intended audiences. Working in public accounting may mean serving a variety of customers and dealing with specific taxation and financial principles, whether involving individuals or companies. Management accounting, on the other hand, is all about interacting with a single organization’s leadership team consistently, taking an active hand in forming the company’s strategy and a position of authority in the financial department.

Certified Public Accountant (CPA) credentials are relevant in many kinds of accounting, and hiring managers may place significant weight on passing the CPA exam. Management accounting also has its own certification ― the Certified Management Accountant (CMA) designation overseen by the Institution of Management Accountants. Investopedia notes there are other professional certifications management accountants may want to seek, including Chartered Global Management Accountant.

What are projected management accounting salaries?

By becoming a management accountant, you may be setting yourself up for significant increases in earning power and job opportunities. PayScale places the average annual pay for management accountants at $59,718, with the top 10% of the profession earning over $89,000. Finding work in the right city may enhance your earning power in such a role. PayScale notes Houston is the top-paying city at 15% above industry averages, and New York follows at 12% over the norm.

Earning an optimal salary as a management accountant can come down to your skill set. PayScale names in-depth accounting knowledge and data analysis as the most impactful areas to improve for better earning power, followed by budget management. These principles are more consequential from a pay perspective than knowledge of a specific system or piece of technology.

How do you prepare for a management accounting career?

As with other specialized financial roles, earning a management accounting position can come down to a combination of work history in a related department and targeted graduate-level education. Accounting practices and fundamentals are important parts of the resulting skill set, but so is the management decision-making that ties these financial matters together with overall business operations.

While serving in a full-time financial management role, you can add to your knowledge by taking a degree program such as the online Master of Accounting (MAc) program from the University of Alabama at Birmingham’s Collat School of Business. Online courses at the master’s level can prepare you to sit for the CPA exam and other relevant industry assessments while building your familiarity with the way accounting can affect the overall direction of a company.

Combining accounting fundamentals with responsibility for strategic decisions around products and services, a management accounting position may be ideal for financially savvy professionals interested in having a positive impact on companies’ direction. If this describes your ambitions and goals, check out the UAB online MAc program page to learn more.

Recommended Readings:

7 Reasons You Should Choose Accounting

Master’s in Accounting Salary and Job Opportunities


Bureau of Labor Statistics – Accountants and Auditors

Investopedia – What Management Accountants Do

PayScale – Average Management Accountant Salary