SAP CO "Outlining the Components of Management Accounting"

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The following is a comparison between Management Accounting and Financial
Accounting:

●        Management Accounting
The SAP ERP Management Accounting management function contains all accounting functions necessary for effective controlling. If a company divides its accounting into internal and external accounting, Management Accounting is internal accounting because it provides the responsibility for managing and controlling the company’s operations with necessary information. CO provides all controlling options and is not restricted by legal requirements.

●        Financial Accounting
In Financial Accounting, companies need to create financial statements, such as balance sheets and profit and loss statements. This external reporting has to be in line with standards and certain legal requirements.



Management Accounting provides information that management can use to make managerial decisions. It facilitates the coordination, supervision, and optimization of all processes within a company. This involves recording both the consumption of production factors and the services provided by an organization. Any data that is relevant to costs flows automatically from Financial Accounting to Management Accounting. Costs and revenues are assigned to different CO account assignment objects, such as cost centers, business processes, projects, or orders. These Financial Accounting General Ledger (G/L) accounts are managed in Management Accounting as cost or revenue elements.

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