Managerial Accounting

Cost Accounting

A branch of accounting that observes and calculates the actual costs of a company's operations. Internal managers, rather than auditors, use cost accounting most of the time to identify aspects of their company where costs can be cut. For example, a manager may enlist a cost accountant to determine the most expensive aspects of his/her business that is, where the money goes. The accountant may make a detailed report so that the manager may make decisions based upon it. Because cost accounting is primarily internal, it need not conform to the Generally Accepted Accounting Principles. It is also called managerial or management accounting. See also: Assurance, Activity-based costing.

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Managerial Accounting

What Does Managerial Accounting Mean?

The process of identifying, measuring, analyzing, interpreting, and communicating information in the pursuit of a company's business goals. Also known as cost accounting.

Investopedia explains Managerial Accounting

The key difference between managerial accounting and financial accounting is that managerial accounting is intended to help managers within the organization make decisions. In contrast, financial accounting is intended to provide information to parties outside the organization.

Related Terms:
• Accrual Accounting
• Earnings
• Generally Accepted Accounting Principles—GAAP
• Off-Balance-Sheet Financing
• Operating Leverage