Acct 2302

Managerial accounting has three broad objectives:

-To provide information for planning the organization's actions. -To provide information for controlling the organization's actions. -To provide information for making effective decisions.

Financial accounting =

External accounting

Managerial accounting =

Internal accounting

Important uses of managerial accounting:

New methods of estimating product and service cost and profitability Understanding customer orientation Evaluating the business from a cross-functional perspective Providing information useful in improving total quality management.

What is managerial accounting?

Quite simply, it is the provision of accounting information for a company's internal users. Managerial accounting is the firm's internal accounting system and is designed to support the information needs of managers. Unlike financial accounting, managerial accounting is not bound by any formal criteria such as generally accepted accounting principles (GAAP). Managerial accounting has three broad objectives: (1) To provide information for planning the organization's actions, (2) To provide information for controlling the organization's actions, and (3) To provide information for making effective decisions.

Planning

The detailed formulation of action to achieve a particular end is the management activity

Controlling

The managerial activity of monitoring a plan's implementation and taking corrective action as needed

Decision Making

The process of choosing among competing alternatives

There are two basic kinds of accounting information systems

financial accounting and managerial accounting. Financial Accounting is primarily concerned with producing information for external users, including investors, creditors, customers, suppliers, government agencies, and labor unions. Financial accounting's orientation is historical and is used for investment decisions. Financial statements must conform to certain rules and conventions defined by agencies like the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the International Accounting Standards Board (IASB).

Effective managerial accounting systems provides

information that helps improve companies' planning, control, and decision-making activities.

Managerial accounting

is providing accounting information for a company's internal users. Is not bound by generally accepted accounting principles (GAAP).

Managerial Accounting

produces information for internal users, such as managers, executives, and workers identifies, collects, measures, classifies, and reports financial and nonfinancial information to internal users in planning, controlling, and decision making.

Financial Accounting

provides information for external users: Investors, creditors, customers, suppliers, government agencies, and labor unions. Financial accounting is historical

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