The availability of information is the lifeblood of any cost and management accounting system. It is vital that input information is properly controlled in order that output information is useful. Such information must be relevant for management’s planning, control and decision making purposes.

The information used in costs and management accounting may be quantitative or qualitative.

Quantitative is that which may be measured in monetary terms or other physical units e.g. material may be expressed as Shs. 1000 or 250 kilos. It is easily objectively expressed.

Qualitative information is that information that cannot be objectively expressed. It is therefore very difficult to quantify such information and for this reason, it is largely subjective, for example, a comment by management about the improved employees morale resulting in increased profits- it is hard to express the improved employees morale in monetary( quantified) terms. It is difficult or impossible to objectively quantify qualitative information.

Cost accounting mainly utilizes quantitative information while financial accounting utilizes purely quantitative information. Management accounting utilizes a mixture of the two but the information is still mainly quantitative.

Managers use both qualitative and quantitative information. The accounting system is the main source of qualitative information.

Accounting records

The quantitative information utilized in the cost and management accounting systems can be obtained from either or both of two accounting records sets, normally referred to as ledger systems.

These are

  1. Interlocking ledger system; this is use of separate cost and financial ledger systems to meet the individual needs of cost/management accountants and financial accountants respectively.

  2. Integrated ledger system: Use of single unified ledger system, which serves the needs of both cost and management accounting and financial accounting. It meets the information needs of both cost/management accountants and financial accountants simultaneously.