Financialaccounting Management accounting Fundamental Management Process Objectives Management accounting v/s Financial accounting Uses of management accounting Balance score card Major themes in managerial accounting Evolution in managerial accounting Cost management accounting
o Focuses on preparation of financial statements required by GAAP. Prepared for use by external users. Provides summary of an entity’s financial condition and results of activities.
o Management accounting measures and reports financial and non-financial information that helps managers make decisions to fulfill the goals of an organization.o Managers use management accounting information to: Choose , communicate and implement strategy. Co-ordinate product design, production and marketing decision.
Provide information for decision making and planning. Assisting managers in directing and controlling operational activities. Motivating managers and other employees towards the organization’s goals. Measuring the performance of activities, managers, and other employees.
Assessingthe organizations competitive position, and working with other managers to ensure the organizations long run competitiveness in its industry.
MANAGEMENT FINANCIALNECESSITY Optional RequiredUSES Internal: External: Managers Shareholders Individuals who assist Creditors in analysis Government agencies , etc.PURPOSE Produce information for Produce information for planning, outside users. implementation and control function.INFORMATION CONTENT Both monetary and non- Primarily monetary monetary information events. (i.e., accounting transactions)
Management FinancialUNDERLYING Information to assist Accounting equation:STRUCTURE in decision making Assets= liability + related to: shareholder’s equity Measurement Control Alternative choicesTIME ORIENTATION Primarily future Primarily past oriented. oriented. E.g.: forecasts , Reporting of history estimates, plans. finance. Some historical information for predictive value .REPORT FREQUQNCY Can be monthly, Annually with less weekly, daily or even detailed interim more frequently. report.
o Measurement purpose. Measurement of revenues, costs, and assets.o Control purpose. Evaluate operations and (if needed) assign corrective action to person/organization unit responsible.o Alternative courses of action purpose. Analyze information and choose best course of action.
Model of business performance evaluation that balances measures of financial performance internal operation Innovation and learning Customer satisfaction
FINANCIAL PERSPECTIVE GOALS MEASURESQ. How do we look to the Company’s owners?
CUSTOMER PERSPECTIVE GOALS MEASURESQ.How do are customers view are services?
INNOVATION AND LEARNING PERSPECTIVE GOALS MEASURESQ. How can we continually improve and create value in our company?
INTERNAL OPERATIONS PERSPECTIVE GOALS MEASURESQ. In which activities must we excel?
Information and incentives Behavioral issues Costs and benefits
E-business Service v/s manufacturing firms Emergence of new industries Global competition Focus on customer Cross functional teams PLC JUST IN TIME
A management planning and control systemwith following objectives Measure cost of resources Eliminate non value added costs Efficiency and effectiveness of activities Identify new activities
PRODUCT DESIGN PRODUCTION RESEARCH AND DEVELOPMENT MARKETINGSECURING RAWMATERIAL AND DISTRIBUTIONOTHER RESOURCES CUSTOMER START SERVICE