Running a business:
Preparing management accounts
Management accounts can be an important tool in helping you to manage your business. If you prepare management accounts monthly, for example, you will obtain regular information on how your business is performing and may be able to identify trends.
Most computerised accounting packages will prepare management accounts for you. However, these accounts are only as good as the information that is entered into them and so you need to ensure your data entry and reconciliations are up to date before you rely on computer generated accounts.
To get a full picture you should also include accruals and prepayments together with journal entries for other month end adjustments such as depreciation or adjustments arising following disposal of fixed assets or payments under finance leases.
If you provide services you may also need to account for income where you have done some of the work but not yet raised an invoice. More details are provided in our guide "Service contracts - the tax liability time bomb!" (see related literature below).
Your accountant can help you obtain reliable management accounts in several ways:
- By training your staff how to prepare the accounts;
- By review the management accounts; or
- By preparing the management accounts for you.
The "Management accounting systems" case study, in the related literature link below, illustrates how we can help you to choose and adapt your business' accounting systems as your business grows.
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Where next?
Within Financial information…- Effective management information
- Budgets
- Why you need financial statements
- Understanding your financial statements
Within Running a business
General…
