...When someone says accounting the thought of the definition seems to be universal. What many don’t realize is that there are different kinds of accounting and different uses with those types. One major and different type of accounting other than the well-known financial accounting is managerial accounting. In the following paper I will discuss what managerial accounting is and how it’s used, the difference between managerial and financial accounting, the users of this accounting, ethics in accounting, and careers in managerial accounting. Managerial accounting is “the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals” (Managerial Accounting Definition, 2003). Managerial accounting is also known as cost accounting (2003). Managerial accounting provides an organization with the financial data to perform descriptive analytics. The numbers don’t tell anything about the future, but they can be used to make decisions about the future. Without the numbers that managerial accounting provides no appropriate and good decision making would be being made. Managerial accounting is not like other accounting and major differences exist between managerial accounting and financial accounting. Although they work side by side, managerial accounting concentrates on helping people inside the organization, such as managers, make decisions while financial accounting focuses on providing information to people outside...
Words: 603 - Pages: 3
...difference between managerial accountant and a financial accountant are vastly different. Investopedia defines managerial accounting as the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. The information that a managerial account has is primarily targeted to assist managers inside the organization to make better decisions for the company ("Financial accounting," ). On the other hand the financial accounting is greatly different in that it is a method of recording, summarizing and reporting the numerous amounts of dealings from an industry; as a result it makes available a precise representation of the business fiscal situation and performance. The most important objective of financial accounting is the planning of financial statements - including the balance sheet, income statement and cash flow statement that condenses the firm's functioning presentation over a specific period, and financial position at a precise point in time. These statements - which are normally prepared quarterly and annually, and in accordance with Generally Accepted Accounting Principles (GAAP) - are aimed at external parties including investors, creditors, regulators and tax authorities ("Financial accounting," ). The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas managerial accounting information is aimed...
Words: 920 - Pages: 4
...Cost Accounting : An Introduction MODULE - 6B Elementary Cost Accounting 27 COST ACCOUNTING : AN INTRODUCTION After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only to fix price but also to ascertain the margin of profit. Knowledge of the cost determination is also necessary to keep a check on the cost of product/control on wastages, etc. The accounting used to study the various aspects of cost is known as cost accounting. In this lesson, you will learn about meaning, importance, limitations etc. of cost accounting. Notes OBJECTIVES After studying this lesson, you will be able to: state the meaning and scope of cost accounting; explain the objectives of cost accounting; differentiate between cost accounting and financial accounting; state importance of cost accounting; explain limitations of cost accounting. 27.1 MEANING AND SCOPE OF COST ACCOUNTING Cost accounting is the process of determining and accumulating the cost of product or activity. It is a process of accounting for the incurrence and the control of cost. It also covers classification, analysis, and interpretation of cost. In other words, it is a system of accounting, which provides...
Words: 2802 - Pages: 12
..."USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. o "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL CONCEPT" 1 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. TOPICS TO COVER: ABSTRACT INTRODUCTION PROBLEM ASSUMPTION UNDERLYING CVP ANALYSISI THE CONTRIBUTION MARGIN. CONTRIBUTION MARGIN INCOME STATEMENT DEFINE THE BREAKEVEN POINT WHAT IS THE C.M RATIO. THE IMPORTANCE of UNIT CONTRIBUTION MARGINE DETERMINATI SOME APPLICATIONS OF CM “WHAT IF “ANALYSIS ON OF TARGET INCOME AND TAXES MOS- MARGINE OF SAFETY CHOOSING THE COST STRUCTURE TO DECREASE COST ULTIMATELY DEGREE OF OPERATING LEVERAGE DEGREE OF OPERATING LEVERAGE IMPORTANCE FOR MANAGERS SALES MIX . CASE TO STUDY. LIMITATION OF CVP CONCLOUSION REFERENCES 2 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. ABSTRACT: In order to cope with many planning decisions managers use cost volume profit analysis , They find it an extremely useful measurement in a variety of ways . The present...
Words: 2473 - Pages: 10
...- 6B Elementary Cost Accounting Notes 95 Cost Accounting : An Introduction ACCOUNTANCY After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only to fix price but also to ascertain the margin of profit. Knowledge of the cost determination is also necessary to keep a check on the cost of product/control on wastages, etc. The accounting used to study the various aspects of cost is known as cost accounting. In this lesson, you will learn about meaning, importance, limitations etc. of cost accounting. OBJECTIVES After studying this lesson, you will be able to: state the meaning and scope of cost accounting; explain the objectives of cost accounting; differentiate between cost accounting and financial accounting; state importance of cost accounting; explain limitations of cost accounting. 27.1 MEANING AND SCOPE OF COST ACCOUNTING Cost accounting is the process of determining and accumulating the cost of product or activity. It is a process of accounting for the incurrence and the control of cost. It also covers classification, analysis, and interpretation of cost. In other words, it is a system of accounting, which provides the ...
Words: 2801 - Pages: 12
...Abstract The functional areas of business are management, law, human resources management, leadership, accounting, finance, economics, research and statistics, operations management, marketing, and strategic planning. I believe all the functional areas are necessary to have a successful organization, however, the two areas stand out as vital to getting a business started and keeping it profitable, and they are human resources and the accounting departments. An organization will need to analyze what roles are vital when hiring their personnel to make sure they are suitable for their positions. Functional Areas of Business The functional areas of business are management, law, human resources management, leadership, accounting, finance, economics, research and statistics, operations management, marketing, and strategic planning. I believe all the functional areas are necessary to have a successful organization, however, the two areas stand out as vital to getting a business started and keeping it profitable, and they are human resources and the accounting departments. Human Resources (HR) is the department that is responsible personnel hiring, applicant tracking, development employee skills, benefits and making sure people are in compliance with regulations. According to McShulskis (1996) article, the function of Human Resource departments is growing in strategic importance and also stated that more than three quarters of the executives anticipate increasing productivity significantly...
Words: 937 - Pages: 4
...Introduction Managerial accounting is concerned with providing information to managers- that is, to those who are inside an organization and who direct and control its operations. Managerial accounting can be contrasted with financial accounting, which is concerned with providing information to stockholders, creditors and others who are outside an organization (Garrison and Noreen, 1999). Managerial accounting information includes: * Information on the costs of an organization’s products and services. For Example, managers can use product costs to guide the setting of selling prices. In addition, these product costs are used for inventory valuation and income determination (Horngren and Foster, pp. 2). * Budgets: A budget is a quantitative expression of a plan. * Performance reports: These reports often consist of comparisons of budgets with actual results. The deviations of actual results from budget are called variances (Horngren and Foster, pp. 3) * Other information which assist managers in their planning and control activities. Examples are information on revenues of an organization’s products and services, sales back logs, unit quantities and demands on capacity resources (Kaplan and Atkinson, pp. 1). Managerial Accounting Practices around the World Traditional managerial accounting systems are mainly designed to measure the efficiency of internal processes. In the 1980’s, traditional managerial accounting practitioners were heavily criticized...
Words: 1595 - Pages: 7
...Management Managerial Economics Financial Accounting Environment Management Quantitative Techniques Business Legislation Communication Skills- I Computers for Managers ITM UNIVERSITY, RAIPUR Master of Business Administration Subject: Principles of Management Semester-I Unit I Introduction - Nature, function, definition and importance of management, Definition, nature, purpose and scope of management, Functions of a manager, an overview of planning, organizing, staffing leading and controlling. Is management a science or art? Unit II Development of Management Thought - Scientific management; Contribution of Taylor, Fayol, Mary Follet, Elton Mayo; Hawthorne experiments, Contingency approach, Indian heritage in production and consumption. Management and administration, Management as a profession, Professionalism of management in India, Management ethics and management culture, Skills required of manager, Classification of skills, Methods of skills development. Unit III Management Planning - Concept of planning, objectives, Nature, Types of plan, Stages involved in planning, Characteristics of a good plan, Importance, Limitations of planning, Making planning effective, Strategic planning in Indian Industry, MBO. Decision Making - Concept, characteristics of decisions, Types of decisions, Steps Involved in decision making, Importance of decision making, Methods of decision making, Committee Decision Making. Unit IV Organisation - Concepts, Principle of organization, Importance, Features...
Words: 3209 - Pages: 13
...Introduction to Managerial Accounting As the manager of an accounting department, it has been noticed that there is a need for another managerial accountant to focus on internal accounting. It is necessary to bring forth information that will prove the need for this position to the CEO. The following information will explain the objectives and characteristics of an internal accounting system. It will then touch on the importance of the information to the company and explains ethics in business especially when it comes to the managerial accountants place in the company. So what is an internal accounting system? The internal accounting system is in place to ensure managers are able to make the best decisions based off of the information given to them by their accounting systems (Shanker, S., 2012). Some objectives that an internal accounting system completes are payroll duties, tracking spending, preparing budgets and balancing those budgets. The internal accounting system must also be able to produce annual reports based off of the data gathered over the year. The information gathered in the internal accounting system is important because it helps managers plan for the future of the company, help the business run more smooth, keep information in an easily accessed location and it keeps everyone on the same page within the company. Without this information, the business couldn’t make informed decisions on future purchases. It would be impossible for a business...
Words: 432 - Pages: 2
...Managerial Accountants Costing Managerial Accounting has acquired more importance during the past years. The process of managerial costing consists of “measuring and assigning value to a company’s operation” (Hoffelder, 2012). Because of the value that this has acquired for many companies, is that the Institute of Management Accountants also referred as the IMA, have now been working on guidelines that detail the principles of managerial costing that are “unrelated to the cost modeling commonly used for financial reporting” (Hoffelder, 2012). Presently, managerial accountants work with a company’s information that is usually left out the financial reports. This supplement information is becoming very valuable that GAAP, also knows as the Generally Accepted Accounting Principles, is considering its own accounting principles. The model framework is not being put together as an alternative to GAAP, but instead its complement. As the chair of the IMA’s Managerial Costing Conceptual Framework Task Force, Mr. Larry White states “Management accounting is about what goes on inside the organization and making the purely economic decisions that are necessary for sustainable long-term growth and profitability” (Hoffelder, 2012). In other words, these guiding principles are not meant to set actual standards, but rather achieve the objective of forward looking models for internal costing purposes. Companies put a great significance on their financial reporting. The key principle...
Words: 601 - Pages: 3
...Unit 1 IP Managerial Accounting Sheri Ann Heil American InterContinental University To: John Smith-CEO From: Sheri Heil-Manager/accounting department Date: February 12, 2012 Re: Hiring managerial accountant to focus on internal accounting Introduction This memo will explain the objectives of having another managerial accountant that would focus on internal accounting for the company. Above all this person will help organize these systems to be even more reliable for the board of directors and management to make concise decisions. Therefore making the meetings easier to connect with the internal accounting systems for the corporation, and help to clarify government regulations and corporate policies. The Objectives and Characteristics of an Internal Accounting System With this in mind, objectives of an internal accounting system are that it will support, encourage, and protect management practices. The general purpose for internal account system is that it supports the financial decision making and also supports the general decision making. This internal accounting system will help clarify that the government regulations are followed, all organization policies are compiled with, financial information will be reliable so that the board of directors and management can make these decisions correctly. Therefore, internal accounting systems will make sure that the assets and records of the firm are not stolen, misused or destroyed (M.U.S.E., 2012). The...
Words: 520 - Pages: 3
...MEMO To: CEO From: Accounting Manager Date: February 19, 2013 Re: Need for internal managerial accountant Dear Chief Executive Officer, This is a memo that will state the reasons why and benefits of hiring another managerial accountant. As we all know, the significance of a trustworthy accounting department is essential in any business. Accounting is specifically the most important department of a business for the simple fact that it deals with the company’s money statuses. This includes where a business can and can’t go financially and what it has and has not accomplished in terms of financial objectives. It is essential that a business have a strong internal accounting system because it can mean monetary success or failure. An internal accounting system includes the maintenance of the company’s finances in terms of short as well as long-term goals, strategy formulation for revenue, operational direction and control of the company’s finances, and the organization of resources and assets aligned with the desired budget within the company. All of these duties will be separated and given specifically to the new internal accounting manager. It is desired that a position be made specifically for these duties because of the importance in the company’s finances. One can not get too overwhelmed with other aspects and/or factors within the company to make mistakes or over or under budget the company. There should be a main focus so there are no unanalyzed risks involved. (Wild and...
Words: 548 - Pages: 3
...Accounting Information for Managers To Make Better Decisions 1 Abstract This paper analysis how the accounting information would support the decision making process. The main goal of an accounting system is to provide financial information about the organization including financial situation and the performance of the organization. The decision makers should know the situation of the organization either by comparing competitors or previous periods’ performance in order to achieve the objectives of the company and this being possible by using accounting information. In addition, this thesis studies the importance of having effective and efficient accounting system to make better decision as it relates to increase the profitability target of an organization. Organizations should replace their weak accounting system in order to ensure that each team member in the Accounts Department is conscious of their role to produce good accounting information (1, Okoli Margaret). The result of this paper describes that providing right information to the right people in time via management reporting to maximize the use of reports in decision-making. 2 Introduction Any organization should survive and excel in the fast paced and ever changing market. We are living in the digital era so information can be found everywhere via websites, databases documents, reports, and emails. However, it’s important to read the historical data-set during decision making process but providing report in quick...
Words: 2005 - Pages: 9
...Purpose of Managerial Accounting M B Colorado Technical University Online August 26, 2014 Purpose of Managerial Accounting The purpose of this presentation is to convey the importance and purpose of managerial accounting, how the managerial accountants support the strategic decisions, ways strategies can be implemented by management and strategy implementation steps that managers can take. As the Board of Directors you will be charged with interpretation of information provided by the accountants. As a board using the financial and managerial accountants’ reports and feedback will assist with the planning and execution of decision that will strategically allow all employees from management down to the front line to operate efficiently. The purpose of managerial accounting is to take historical information, such as financial statements, budgets and operations reports to create a plan focus inwardly within the company. Managerial accounting is a system of providing and measuring financial and operational information. The system is designed to motivate behaviors, guides managerial action, and support and create necessary cultural values needed to achieve an organization’s strategic objectives (Geense, 2005). Managerial accounting is comprised of 4 ideas that are the key to its definition. The ideas capture the purpose, scope, attributes and nature of managerial accounting. Cost and operational information, including some financial information define the scope. Reaching...
Words: 831 - Pages: 4
...Managerial Accounting Introduction All businesses have certain goals and criteria in mind. It is important to be able to meet a company’s goals and needs. It is important to run at full capacity and efficient. What Are Some of the Issues the Host Foreign Country Could Face As A Result of the Expansion? Businesses have precise objectives and goals. Many businesses have vision and mission statement that incorporates their goals. It doesn’t matter the type business, nonprofit or profit. The goals can be to serve specific constituents or to get the best out of the owner’s goals. The business goals create a need for information. The business gathers past and future information from internal and external sources. This data is used by the managers with authority over the company’s resources. What Cultural Barriers and Diversity Issues Are Commonly Encountered By International/Multinational (MNC) and Global Organizations? The information used by management is created for planning and control decisions. The process used to create accounting reports influences management strategy, and the structure of those reports significantly impact management strategy. There should be certain characteristics in these reports: •Importance of Timeliness -- The competitive environment demands immediate access to information, so timeliness is essential. •Identity of Decision Maker – Information should be given to the decision makers. •Oriented toward the Future -- Management should make objective...
Words: 489 - Pages: 2
