Management Accounts Definition
Management accounts are financial statements prepared by businesses on a regular basis to give insights into the company’s current financial position and performance. The information contained in management accounts can be used by managers to make informed decisions about where to allocate resources and how to improve profitability.
While management accounts are typically prepared monthly or quarterly, some businesses may choose to produce them more frequently. The key elements of a management account include:
-A balance sheet, which provides a snapshot of the business’s assets, liabilities and equity at a particular point in time.
-An income statement, also known as a profit and loss statement, which shows how much revenue the business has generated and what costs it has incurred over a period of time.
-A cash flow statement, which tracks the movement of cash in and out of the business over a period of time.
-Key financial ratios, which provide insights into the business’s profitability, liquidity and solvency.
