Final answer:
The IMA defines management accounting as a profession assisting management in decision making, planning and performance systems, and financial expertise to support organizational strategy.
Step-by-step explanation:
The Institute of Management Accountants (IMA) defines management accounting as a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy.
Management accounting goes beyond merely preparing financial statements and involves strategic activities like budgeting, forecasting, and analysis to support the decision-making process. This branch of accounting also focuses on measuring, analyzing, and reporting financial and non-financial information that helps managers make decisions to fulfill the goals of an organization.
Key elements included in the scope of management accounting entail understanding the national accounts, such as Gross Domestic Product (GDP) and its components, which provide a broad overview of the economic activity and health of a country.
Management accountants must also be familiar with the flow of funds, which captures the financial transactions within the economy, as well as international accounts, which represent the economic transactions between countries. These concepts help management accountants in analyzing the global impact on the business and its strategy.
Another critical aspect is grasping various indicators such as the Consumer Price Index (CPI), the Producer Price Index (PPI), and the Employment Cost Index (ECI), which are essential for understanding prices and inflation. These indexes allow management accountants to assess the cost environment in which the business operates and to forecast the potential impact of economic changes on the company's operations and performance.