collier 1ce ch01

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1 2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 1


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CHAPTER 1

Introduction toAccounting

2 2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 1


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Accounting

the process of identifying, measuring andcommunicating economic information to

permit informed judgements and decisions

by users of the informationAmerican Accounting Association

2013 John Wiley & Sons, Ltd, Accounting for Managers, 1Ce, Ch 1 4


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Accounting

Accounting as a process

Capturing, recording, summarizing, reporting,

interpreting Economic information

Financial & non-financial

Decision usefulnessUsefulness in making decisions

Broad spectrum of users



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Accountability

Notion of Accountability

Managers, through the process of accounting, provide

assurances to stakeholders (owners, governments,

investors, suppliers, customers, employees, etc.) that

managers have acted in their best interests.

Stewardship function of managers

Businesses are entrusted to the care of managers



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Interrelated Functions

Part of the role of both non-financial

(marketing, operations, human resources,

etc.) and financial managers

1. Planning

2. Decision Making

3. Control



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The Role of Financial Accounting

Focused on the recording of accounting transactions with

the end result being the formal financial statements of an

enterprise.

Ensure that financial transactions and reports areprepared in accordance with regulations

Provide accountability to the stakeholders of a company

Create an equitable and fair basis for assessing

business performance. Concerned primarily with external reporting



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The Role of Management Accounting

Focused on the needs of internal users of information and

is not restricted by accounting principles or regulations

cost accounting is the forerunner of management

accounting



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Core Activities of Management Accounting

1. Cost management

2. Strategic performance measurement

3. Process management

4. Risk management5. Connecting company strategy with operations

and anticipating customer and supplier needs

6. Looking to the future to provide real-worldstrategic direction, business management, and

leadership



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Trends in Management Accounting

Value-based management

Non-financial performance measurement

systems Quality management

Environmental accounting

Activity-based management Strategic management accounting

Lean accounting



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Conclusion Tools and techniques of accounting and their role in the

planning, controlling, and decision-making processes

within an organization.

Accounting information is both financial and non-financial

and includes anything that can be measured and

controlled within an organization.

Management accounting is concerned not only with the

management of costs but also with the management of

other non-financial factors, such as quality, customerloyalty, and employee motivation.


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