What are management accounts?
Management accounts are financial information prepared for the managers of a business i.e. its directors/owners. There is no requirement to prepare management accounts but they are useful to see how the business is performing and how healthy its finances are. Management accounts should contain at least a profit & loss account (income and expenditure) and a balance sheet. However, they can also include other useful reports such as: cashflow, lists of customer and supplier balances, sales per customer, key performance indicators. The reports can also be tailored to make them more useful – they don’t have to comply with any regulations. Management accounts are also usually prepared frequently (e.g. monthly) and soon after a period end so that the managers can make timely decisions based on the information.
In contrast, annual accounts are a requirement for all companies, they must adhere to strict formats and accounting regulations, and are usually prepared several months after the year end. As such they are less useful for managers.FAQs