Scribd
Upload
473 views3 pages

Lecture 1 Managerial Accounting

Managerial accounting serves the needs of managers within an organization by providing information to help with planning, controlling, and decision making. It focuses on relevance, timeliness, and segment performance rather than just reporting past financial results. Managerial accountants are strategic business partners who understand both financial and operational aspects of the business and can provide insights into profits as well as processes, people, and environmental stewardship.

Uploaded by

Aries Tibar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
473 views3 pages

Lecture 1 Managerial Accounting

Managerial accounting serves the needs of managers within an organization by providing information to help with planning, controlling, and decision making. It focuses on relevance, timeliness, and segment performance rather than just reporting past financial results. Managerial accountants are strategic business partners who understand both financial and operational aspects of the business and can provide insights into profits as well as processes, people, and environmental stewardship.

Uploaded by

Aries Tibar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

CHAPTER 1:

MANAGERIAL ACCOUNTING
“Creating value through values” is the credo of today’s management accountant. It means that
management accountants should maintain an unwavering commitment to ethical values while using their
knowledge and skills to influence decisions that create value for organizational stakeholders. These skills include
managing risks and implementing strategy through planning, budgeting and forecasting, and decision support.

Management accountants are strategic business partners who understand the financial and operational
sides of the business. They not only report and analyze financial measures, but also nonfinancial measures of
process performance and corporate social performance. Think of these responsibilities as profits (financial
statements), process (customer focus and satisfaction), people (employee learning and satisfaction), and planet
(environmental stewardship). Source: Conversation with Jeff Thomson, president and CEO of the Institute of Management Accountants.

This chapter explains why managerial accounting is important to the future careers of all business
students. It begins by answering two questions: (1) What is managerial accounting? and (2) Why does managerial
accounting matter to your career? It concludes by discussing six topics—ethics, strategic management, enterprise
risk management, corporate social responsibility, process management, and leadership—that define the business
context for applying the quantitative aspects of managerial accounting.

What Is Managerial Accounting?

Many students enrolled in this course will have recently completed an introductory financial accounting
course. Financial accounting is concerned with reporting financial information to external parties, such as
stockholders, creditors, and regulators. Managerial accounting is concerned with providing information to
managers for use within the organization.

Exhibit 1–1 summarizes seven key differences between financial and managerial accounting. It recognizes
that the fundamental difference between financial and managerial accounting is that financial accounting serves
the needs of those outside the organization, whereas managerial accounting serves the needs of managers
employed inside the organization. Because of this fundamental difference in users, financial accounting
emphasizes the financial consequences of past activities, objectivity and verifiability, precision, and companywide
performance, whereas managerial accounting emphasizes decisions affecting the future, relevance, timeliness, and
segment performance.

AA SEGMENT is a part or activity of an organization about which managers would like cost, revenue, or
profit data. Examples of business segments include product lines, customer groups (segmented by age, ethnicity,
gender, volume of purchases, etc.), geographic territories, divisions, plants, and departments. Finally, financial
accounting is mandatory for external reports and it needs to comply with rules, such as generally accepted
accounting principles (GAAP) and international financial reporting standards (IFRS), whereas managerial
accounting is not mandatory and it does not need to comply with externally imposed rules. As mentioned in Exhibit
1–1, managerial accounting helps managers perform three vital activities— planning, controlling, and decision
making.

PLANNING involves establishing goals and specifying how to achieve them. CONTROLLING involves
gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.
DECISION MAKING involves selecting a course of action from competing alternatives. Now let’s take a closer look
at these three pillars of managerial accounting.

You might also like