CHAPTER 1

MANAGERIAL ACCOUNTING
IN THE INFORMATION AGE

CHAPTER Introduction

FINANCIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT RELATE TO PREPARING REPORTS FOR EXTERNAL USERS OF ACCOUNTING INFORMATION. IN COMPARISON, MANAGERIAL ACCOUNTING STRESSES ACCOUNTING CONCEPTS AND PROCEDURES THAT ARE RELEVANT TO PREPARING REPORTS FOR INTERNAL USERS OF ACCOUNTING INFORMATION. THIS CHAPTER PROVIDES AN OVERVIEW OF THE ROLE OF MANAGERIAL ACCOUNTING IN PLANNING, CONTROL, AND DECISION MAKING. IT ALSO DEFINES IMPORTANT COST CONCEPTS AND INTRODUCES KEY IDEAS THAT WILL BE EMPHASIZED THROUGHOUT THE TEXT. THE CHAPTER CONCLUDES WITH A DISCUSSION OF THE INFORMATION AGE AND THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS, A FRAMEWORK FOR ETHICAL DECISION-MAKING AND THE ROLE OF THE CONTROLLER AS THE TOP MANAGEMENT ACCOUNTANT. NOTE THAT YOU CAN ENHANCE AND TEST YOUR KNOWLEDGE OF THE CHAPTER USING WILEY’S ONLINE RESOURCES, THE SELF-ASSESSMENT QUIZ AND REVIEW PROBLEMS AT THE END OF THE CHAPTER.

Objectives, Terms, and Discussions

LO1 State the primary goal of managerial accounting.

GOAL OF MANAGERIAL ACCOUNTING

Managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information managers need for planning, control, and decision making.

LO2 Describe how budgets are used in planning.

Planning
A plan communicates a company's goals to employees and specifies the resources needed to achieve them. The financial plans prepared by managerial accountants are referred to as budgets. For example, a profit budget indicates planned income, a cash-flow budget indicates planned cash inflows and outflows, and a production budget indicates the planned quantity of production and the expected cost.

LO3 Describe how performance reports are used in the control process.

Control