The Importance Of Managerial Accounting In Nonprofit Organizations

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Managerial Accounting plays very important role in a nonprofit organization. Accounting analysis techniques will help managers within organization to make better management decisions. With the help of these techniques managers making decisions about selecting equipment, determining whether costs are being efficiently incurred, monitoring financial and nonfinancial performance measures, and developing strategic plans. Managerial Accounting normally covers the following fields in nonprofit organizations. • Making Financial Decisions • How to Save Money • Control Cash Flow • Efficient Planning • Auditing Nonprofit managerial accounting adapts the techniques of for-profit analytical analysis to a nonprofit environment to find solutions to managerial …show more content…

Hence in nonprofit managerial analysis, the revenue side of the analysis is usually not as relevant as it is in for-profit organizations. In nonprofit organizations, the monetary support provided is not always directly related to the service provided, as patrons are not directly charged for services. So the success is measured by the quality of economically costed services. For-profit organizations depreciation is important because it reduces the taxes that a corporation pays. But in organizations that do not pay taxes, the importance of depreciation expense to decision making is reduced. So the only importance of depreciation expense in a nonprofit context is restricted to making a determination about the extent to which facilities have been depreciated. In this scenario it is very important to have preventive maintenance procedures to reduce the risk of collapsing public infrastructure. Without proper maintenance of facilities, public funds in excess of projections will have to be used to replace prematurely deteriorated facilities or to fund above-normal maintenance repairs. Information about the amount of deferred maintenance can be more important to a nonprofit manager than depreciation expense

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