Managerial Accounting and the Business Organization PRESENTED BY  BABASAB PATIL
Learning Objective 1 <ul><li>Describe the major users and </li></ul><ul><li>uses of accounting information. </li></ul>
Users of Accounting Information use   information for day-to-day operating decisions... Internal managers… and for long-ra...
Users of  Accounting Information External parties: use   information for making decisions about the company. Investors Gov...
What kinds of Accounting Information do Managers Need? Good accounting information helps an organization achieve its goals...
Uses of Accounting Information This is the accumulating and  classification of data. Am I doing well or poorly? Scorekeepi...
Uses of Accounting Information Which problems should I look into? Attention directing means reporting and  interpreting in...
Uses of Accounting Information This role asks: Of the several alternatives available, which is the best? This often involv...
Learning Objective 2 <ul><li>Describe the cost-benefit and </li></ul><ul><li>behavioral issues involved in </li></ul><ul><...
Influences on Accounting Systems An accounting system is a formal mechanism for gathering, organizing, and communicating i...
Influences on Accounting Systems Generally accepted accounting principles (GAAP) Foreign Corrupt Practices Act Internal co...
Influences on Accounting Systems In 2002 the Sarbanes-Oxley Act required chief executive officers to sign a statement veri...
Importance of Ethics No regulation can be as effective in ensuring reliability as high ethical standards of accountants.
Management Accounting in Service and Nonprofit Organizations Service organizations Nonprofit organizations Accounting firm...
Service Organizations Labor is intensive. Output is usually difficult to define. Major inputs and outputs cannot be stored.
Cost-Benefit and Behavioral Considerations 1. Cost-benefit balance 2. Behavioral implications
Cost-Benefit Balance The primary consideration in choosing among accounting systems and methods is weighing estimated cost...
Behavioral Implications The system must provide accurate, timely budgets and performance reports in a form useful to manag...
Learning Objective 3 <ul><li>Explain the role of budgets </li></ul><ul><li>and performance reports </li></ul><ul><li>in pl...
The Nature of Planning and Controlling It is the purposeful choice from among a set of alternative courses of action desig...
The Nature of Planning and Controlling The management process internal accounting system: Planning –  Improve profitabilit...
Role of Budgets A budget is a quantitative expression of a plan of action. The Starbucks store would express its plan for ...
Performance Reports What are performance reports? These are reports that compare actual results with budgeted amounts.
Performance Reports Performance reports formalize controls and provide feedback by comparing results with plans and by hig...
Performance Reports    Budget     Actual   Variance Sales $50,000 $50,000 0 Less: Ingredients   22,000   24,500   $2,500 U...
Objective 4 <ul><li>Discuss the role accountants </li></ul><ul><li>play in the company’s </li></ul><ul><li>value chain fun...
Planning and Control for Product Life Cycles and the Value Chain Product life cycle refers to the various stages through w...
Planning and Control for Product Life Cycles and the Value Chain Product development Introduction to market Mature market ...
The Value Chain Support functions R & D Design Production Marketing Distribution Service
Value Chain Functions Research and development… is the generation of, and experimentation with, ideas related to new produ...
Value Chain Functions Design… is the detail and engineering of products.
Value Chain Functions Production… is the coordination and assembly of resources to produce a product or deliver a service.
Value Chain Functions Marketing… is the manner by which individuals or groups learn about the value and features  of produ...
Value Chain Functions Distribution… is the mechanism by which products or services are delivered to the customer.
Value Chain Functions Customer service… is the support activities provided to the customer.
Objective 5 <ul><li>Contrast the functions of </li></ul><ul><li>controllers and treasurers. </li></ul>
Accounting’s Position in the Organization Preparing standardized reports Collecting and compiling information Interpreting...
Line and Staff Authority Line managers Staff managers Cross-functional teams
Controller and Treasurer Functions Financial Vice-President or CFO Treasurer Controller
Functions of the Controller <ul><li>Planning for control </li></ul><ul><li>Reporting and interpreting </li></ul><ul><li>Ev...
Functions of the Treasurer <ul><li>Provision of capital </li></ul><ul><li>Investor relations </li></ul><ul><li>Short-term ...
Learning Objective 6 <ul><li>Explain why accounting </li></ul><ul><li>is important in a variety </li></ul><ul><li>of caree...
Career Opportunities in Management Accounting The Certified Management Accountant (CMA) designation is the internal accoun...
Career Opportunities in Management Accounting 1. Economics, finance, and management 2. Financial accounting and reporting ...
Learning Objective 7 <ul><li>Identify current trends in </li></ul><ul><li>management accounting. </li></ul>
Current Trends Shift from a manufacturing-based to a service-based economy Increased global competition Advances in techno...
Current Trends Just-in-time (JIT) philosophy Computer-aided design Computer-aided manufacturing Computer-integrated manufa...
Learning Objective 8 <ul><li>Appreciate the importance </li></ul><ul><li>of ethical conduct to </li></ul><ul><li>professio...
Standards of Ethical Conduct The Institute of Management Accountants (IMA) is the largest association of management accoun...
Pressures for Unethical Behavior Ignoring the small stuff Economic cycles Accounting rules Emphasis on short-term results
End of Chapter 1
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Managerial accounting

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ABOUT THE MANAGERIAL ACCOUNTING OF THE MANAGER

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Managerial accounting

  1. 1. Managerial Accounting and the Business Organization PRESENTED BY BABASAB PATIL
  2. 2. Learning Objective 1 <ul><li>Describe the major users and </li></ul><ul><li>uses of accounting information. </li></ul>
  3. 3. Users of Accounting Information use information for day-to-day operating decisions... Internal managers… and for long-range strategic decisions.
  4. 4. Users of Accounting Information External parties: use information for making decisions about the company. Investors Government authorities
  5. 5. What kinds of Accounting Information do Managers Need? Good accounting information helps an organization achieve its goals and objectives.
  6. 6. Uses of Accounting Information This is the accumulating and classification of data. Am I doing well or poorly? Scorekeeping:
  7. 7. Uses of Accounting Information Which problems should I look into? Attention directing means reporting and interpreting information that helps managers to focus on operating problems. Attention directing:
  8. 8. Uses of Accounting Information This role asks: Of the several alternatives available, which is the best? This often involves special studies. Problem solving:
  9. 9. Learning Objective 2 <ul><li>Describe the cost-benefit and </li></ul><ul><li>behavioral issues involved in </li></ul><ul><li>designing an accounting system. </li></ul>
  10. 10. Influences on Accounting Systems An accounting system is a formal mechanism for gathering, organizing, and communicating information about an organization’s activities.
  11. 11. Influences on Accounting Systems Generally accepted accounting principles (GAAP) Foreign Corrupt Practices Act Internal control Management audits
  12. 12. Influences on Accounting Systems In 2002 the Sarbanes-Oxley Act required chief executive officers to sign a statement verifying the accuracy of the company’s financial statements. Sarbanes-Oxley Act:
  13. 13. Importance of Ethics No regulation can be as effective in ensuring reliability as high ethical standards of accountants.
  14. 14. Management Accounting in Service and Nonprofit Organizations Service organizations Nonprofit organizations Accounting firms Law firms Real estate firms Banks Hotels Hospitals Schools Libraries Museums Government agencies
  15. 15. Service Organizations Labor is intensive. Output is usually difficult to define. Major inputs and outputs cannot be stored.
  16. 16. Cost-Benefit and Behavioral Considerations 1. Cost-benefit balance 2. Behavioral implications
  17. 17. Cost-Benefit Balance The primary consideration in choosing among accounting systems and methods is weighing estimated costs against probable benefits.
  18. 18. Behavioral Implications The system must provide accurate, timely budgets and performance reports in a form useful to managers. If managers do not use accounting reports, the reports create no benefits.
  19. 19. Learning Objective 3 <ul><li>Explain the role of budgets </li></ul><ul><li>and performance reports </li></ul><ul><li>in planning and control. </li></ul>
  20. 20. The Nature of Planning and Controlling It is the purposeful choice from among a set of alternative courses of action designed to achieve some objective. What is decision making? This is the core of the management process.
  21. 21. The Nature of Planning and Controlling The management process internal accounting system: Planning – Improve profitability Controlling – Actions – Evaluations Corrections and revisions of plans and actions Budgets, Special reports Accounting system Performance reports Customer surveys Competitor analysis Advertising impact New items report
  22. 22. Role of Budgets A budget is a quantitative expression of a plan of action. The Starbucks store would express its plan for product growth and improved marketing through revenue and advertising budgets.
  23. 23. Performance Reports What are performance reports? These are reports that compare actual results with budgeted amounts.
  24. 24. Performance Reports Performance reports formalize controls and provide feedback by comparing results with plans and by highlighting variances. Variances are deviations from the plan.
  25. 25. Performance Reports Budget Actual Variance Sales $50,000 $50,000 0 Less: Ingredients 22,000 24,500 $2,500 U Store labor 12,000 11,600 400 F Other labor 6,000 6,050 50 U Utilities, etc. 4,500 4,500 0 Total expenses $44,500 $46,650 $2,150 U Operating income $ 5,500 $ 3,350 $2,150 U Starbucks Mayfair Store, March 31, 2004
  26. 26. Objective 4 <ul><li>Discuss the role accountants </li></ul><ul><li>play in the company’s </li></ul><ul><li>value chain functions. </li></ul>
  27. 27. Planning and Control for Product Life Cycles and the Value Chain Product life cycle refers to the various stages through which a product passes.
  28. 28. Planning and Control for Product Life Cycles and the Value Chain Product development Introduction to market Mature market Product phase-out
  29. 29. The Value Chain Support functions R & D Design Production Marketing Distribution Service
  30. 30. Value Chain Functions Research and development… is the generation of, and experimentation with, ideas related to new products, services, or processes.
  31. 31. Value Chain Functions Design… is the detail and engineering of products.
  32. 32. Value Chain Functions Production… is the coordination and assembly of resources to produce a product or deliver a service.
  33. 33. Value Chain Functions Marketing… is the manner by which individuals or groups learn about the value and features of products or services.
  34. 34. Value Chain Functions Distribution… is the mechanism by which products or services are delivered to the customer.
  35. 35. Value Chain Functions Customer service… is the support activities provided to the customer.
  36. 36. Objective 5 <ul><li>Contrast the functions of </li></ul><ul><li>controllers and treasurers. </li></ul>
  37. 37. Accounting’s Position in the Organization Preparing standardized reports Collecting and compiling information Interpreting and analyzing information Being involved in decision making
  38. 38. Line and Staff Authority Line managers Staff managers Cross-functional teams
  39. 39. Controller and Treasurer Functions Financial Vice-President or CFO Treasurer Controller
  40. 40. Functions of the Controller <ul><li>Planning for control </li></ul><ul><li>Reporting and interpreting </li></ul><ul><li>Evaluating and consulting </li></ul><ul><li>Tax administration </li></ul><ul><li>Government reporting </li></ul><ul><li>Protection of assets </li></ul><ul><li>Economic appraisal </li></ul>
  41. 41. Functions of the Treasurer <ul><li>Provision of capital </li></ul><ul><li>Investor relations </li></ul><ul><li>Short-term financing </li></ul><ul><li>Banking and custody </li></ul><ul><li>Credits and collections </li></ul><ul><li>Investments </li></ul><ul><li>Risk management (insurance) </li></ul>
  42. 42. Learning Objective 6 <ul><li>Explain why accounting </li></ul><ul><li>is important in a variety </li></ul><ul><li>of career paths. </li></ul>
  43. 43. Career Opportunities in Management Accounting The Certified Management Accountant (CMA) designation is the internal accountant’s counterpart to the CPA. CMAs must pass an examination that has four parts:
  44. 44. Career Opportunities in Management Accounting 1. Economics, finance, and management 2. Financial accounting and reporting 3. Management reporting, analysis, and behavioral issues 4. Decision analysis and information systems.
  45. 45. Learning Objective 7 <ul><li>Identify current trends in </li></ul><ul><li>management accounting. </li></ul>
  46. 46. Current Trends Shift from a manufacturing-based to a service-based economy Increased global competition Advances in technology Changes in business processes Factors causing changes in management accounting:
  47. 47. Current Trends Just-in-time (JIT) philosophy Computer-aided design Computer-aided manufacturing Computer-integrated manufacturing
  48. 48. Learning Objective 8 <ul><li>Appreciate the importance </li></ul><ul><li>of ethical conduct to </li></ul><ul><li>professional accountants. </li></ul>
  49. 49. Standards of Ethical Conduct The Institute of Management Accountants (IMA) is the largest association of management accountants in the United States. The IMA has issued a Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management.
  50. 50. Pressures for Unethical Behavior Ignoring the small stuff Economic cycles Accounting rules Emphasis on short-term results
  51. 51. End of Chapter 1

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