introduction to managerial accounting acc 200

7/29/2019 Introduction to Managerial Accounting ACC 200

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ACC:250 MANAGERIAL

ACCOUNTING

Moses BukenyaB.COM (HONS); Msc. ACC & Fin, ACCA-

(UK) Level IIAssistant Professor of Business

Email: [email protected]

[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Managerial accounting is the process of

Identifying

Measuring

Analyzing

Interpreting Communicating information

Define Managerial Accounting


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Managing Resources, Activities, and

People

An organization . . .

Acquires Resources

Hires People

Organized set

of activities

Decision

Making

Planning

Directing

Controlling


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How Managerial Accounting Adds Value

to the Organization

Providing information for decision making and

planning.

Assisting managers in directing and controlling

activities. Motivating managers and other employees

towards organizations goals.

Measuring performance of subunits, activities,

managers, and other employees.

Assessing the organizations competitive position.


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The Balanced Scorecard

Financial PerspectiveGoals Measures

Customer Perspective

Goals Measures

Operations Perspective

Goals Measures

Innovation Perspective

Goals Measures

How do we lookto owners?

How do customers

see us?

How can we

continue to

improve?

In which activities

must we excel?


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Managerial versus Financial Accounting

Accounting System

(accumulates financial and

managerial accounting data in the

cost accounting system)

Managerial Accounting

Information for decision

making, planning, and

controlling anorganizations

operations.

Financial Accounting

Published financial

statements and other

financial reports.

Internal

Users

External

Users


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Managerial versus Financial AccountingManagerial Accounting Financial Accounting

Users of Information Managers, within the organization. Interested parties, outside the organization.

Regulation Not required and unregulated, since it is intendedonly for management.

Required and must conform to generally acceptedaccounting principles. Regulated by the Financial

Accounting Standards Board, and, to a lesser

degree, the Securities and Exchange

Commission.

Source of Data The organization's basic accounting system, plusvarious other sources, such as rates of effective

products manufactured, physical quantities of

material and labor used in production, occupancy

rates in hotels and hospitals, and average take-off

dela s in airlines.

Almost exclusively drawn from the organization'sbasic accounting system, which accumulates

financial information.

Nature of Reports and

Procedures

Reports often focus on subunits within the

organization, such as departments, divisions,

geographical regions, or product lines. Based on a

combination of historical data, estimates, and

projections of future events.

Reports focus on the enterprise in its entirety.

Based almost exclusively on historical transaction

data.


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Managerial versus Financial Accounting

Managerial Accou Financial Accounting

Audit

requirements

Not subjected to

audit.

This must be subjected both

to external and internal

Level of

details

Highly detailed. Highly aggregated or

summarized.

Measures Also users non-

financial

measures.

Exclusively in monetary

terms (Financial measures)

Standardizati

on

No standard

formats.

Has standard formats of

presentation.


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A staff position supportsand assists line positions.

Example: A cost accountant inthe manufacturing plant.

Line and Staff Positions

Aline position is directlyinvolved in achieving the

basic objectives of an

organization.

Example: A productionsupervisor in a manufacturing

plant.


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Controller

The chief managerial and financial accountant is

responsible for:

Supervising accounting personnel

Preparation of information and reports,

managerial and financial

Analysis of accounting information

Planning and decision making


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Treasurer

Responsible for raising capital and safeguarding theorganizations assets.

Supervises relationships with financialinstitutions.

Work with investors and potentialinvestors.

Manages investments.

Establishes credit policies.

Manages insurance coverage


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Internal Auditor

Responsible for reviewing accounting procedures,records, and reports in both the controllers and the

treasurers area of responsibility.

Expresses an opinion to top

management regarding theeffectiveness of the

organizations accounting

system.


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Major Themes in Managerial

Accounting

Managerial

Accounting

Information

and Incentives

Costs and

Benefits

Evolution and

Adaptation

Behavioral

Issues


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Evolution and Adaptation in Managerial

Accounting

E-Business

Service vs.

Manufacturing Firms

Emergence of New

Industries

Global Competition

Focus on the Customer

Cross-Functional Teams

Product Life Cycles

Time-Based

CompetitionInformation and

Communication

Technology

Just-in-Time Inventory

Total Quality Management

Continuous Improvement

Change


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Objectives

Measure the cost of resourcesconsumed.

Identify and eliminate non-value-added costs.

Determine efficiency and

effectiveness of majoractivities.

Identify and evaluate newactivities that can improve

performance.

Cost Management Systems

Cost

Management

System


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Product

Design

Research

and

Development

Strategic Cost Management and the

Value Chain

Securing raw

materials andother resources

Production

Marketing

Distribution

Customer

ServiceStart


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Theory of Constraints

A sequential process ofidentifying and

removing constraintsin a system.

Restrictions or barriers that impede

progress toward an objective


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Ethical Climate of Business

The corporate scandals experienced over the last fewyears have shown us thatunethical behavior inbusiness is wrong in a moral sense and can be

disastrous in the economy. In addition to Sarbanes-

Oxley, there will likely be more reforms in corporategovernance and accounting.


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Managerial Accounting as a Career

Professional Organizations

Institute of Management Accountants (IMA)

Publishes

Management

Accountingand research

studies.

Administers

Certified

ManagementAccountant

program

Develops

Standards of

Ethical

Conduct for

Management

Accountants


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Professional Ethics

Competence

Confidentiality

Integrity

Credibility


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End of Chapter 1

introduction to managerial accounting acc 200

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