31 Management accounts
‘Two accountants are in a car. The financial accountant looks out the back window and records its journey. The management accountant is in the driving seat, plans where the car is going, how fast it is going and aligns its direction.’
Popular accounting allegory
In a nutshell
Management accounts are best understood by contrasting them with financial accounts.
Financial accounts report ‘what has happened’ in a business. Management accounts seek to explain ‘why it has happened’.
Financial accounts are required by law to report the historic financial results of a company to shareholders.
Management accounts are produced for operational purposes. They provide more timely and detailed information to company directors and ...
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