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Managerial Accounting


Published on

summery of first chapter from the book managerial accounting written by Ronald W.Hilton

Published in: Economy & Finance, Business

Managerial Accounting

  1. 1. Chapter 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment
  2. 2. Learning Objective 1
  3. 3. Define Managerial Accounting <ul><li>Managerial accounting is the process of </li></ul><ul><li>Identifying </li></ul><ul><li>Measuring </li></ul><ul><li>Analyzing </li></ul><ul><li>Interpreting </li></ul><ul><li>Communicating information </li></ul>
  4. 4. Learning Objective 2
  5. 5. Managing Resources, Activities, and People <ul><li>An organization . . . </li></ul>Acquires Resources Hires People Organized set of activities Decision Making Planning Directing Controlling
  6. 6. Learning Objective 3
  7. 7. How Managerial Accounting Adds Value to the Organization <ul><li>Providing information for decision making and planning. </li></ul><ul><li>Assisting managers in directing and controlling activities. </li></ul><ul><li>Motivating managers and other employees towards organization’s goals. </li></ul><ul><li>Measuring performance of activities, managers, and other employees. </li></ul><ul><li>Assessing the organization’s competitive position. </li></ul>
  8. 8. The Balanced Scorecard How do we look to owner’s? How do customers see us? How can we continue to improve? In which activities must we excel? Financial Perspective Goals Measures Customer Perspective Goals Measures Operations Perspective Goals Measures Innovation Perspective Goals Measures
  9. 9. Learning Objective 4
  10. 10. 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 an organization’s operations. Financial Accounting Published financial statements and other financial reports. Internal Users External Users
  11. 11. Managerial versus Financial Accounting
  12. 12. Learning Objective 5
  13. 13. <ul><li>A staff position supports and assists line positions. </li></ul><ul><ul><li>Example: A cost accountant in the manufacturing plant. </li></ul></ul>Line and Staff Positions <ul><li>A line position is directly involved in achieving the basic objectives of an organization. </li></ul><ul><ul><li>Example: A production supervisor in a manufacturing plant. </li></ul></ul>
  14. 14. Learning Objective 6
  15. 15. Controller <ul><li>The chief managerial and financial accountant responsibility for: </li></ul><ul><ul><li>Supervising accounting personnel </li></ul></ul><ul><ul><li>Preparation of information and reports, managerial and financial </li></ul></ul><ul><ul><li>Analysis of accounting information </li></ul></ul><ul><ul><li>Planning and decision making </li></ul></ul>
  16. 16. Treasurer <ul><li>Responsible for raising capital and safeguarding the organization’s assets. </li></ul><ul><ul><li>Supervises relationships with financial institutions. </li></ul></ul><ul><ul><li>Work with investors and potential investors. </li></ul></ul><ul><ul><li>Manages investments. </li></ul></ul><ul><ul><li>Establishes credit policies. </li></ul></ul><ul><ul><li>Manages insurance coverage </li></ul></ul>
  17. 17. Internal Auditor <ul><li>Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. </li></ul><ul><ul><li>Expresses an opinion to top management regarding the effectiveness of the organizations accounting system. </li></ul></ul>
  18. 18. Learning Objective 7
  19. 19. Major Themes in Managerial Accounting Managerial Accounting Information and Incentives Costs and Benefits Evolution and Adaptation Behavioral Issues
  20. 20. Evolution and Adaptation in Managerial Accounting Service vs. Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Computer-Integrated Manufacturing Product Life Cycles Time-Based Competition Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement Change E-Business
  21. 21. <ul><li>Objectives </li></ul><ul><li>Measure the cost of resources consumed. </li></ul><ul><li>Identify and eliminate non-value-added costs. </li></ul>Cost Management Systems Cost Management System
  22. 22. <ul><li>Objectives </li></ul><ul><li>Determine efficiency and effectiveness of major activities. </li></ul><ul><li>Identify and evaluate new activities that can improve performance. </li></ul>Cost Management Systems Cost Management System
  23. 23. Learning Objective 8
  24. 24. Strategic Cost Management and the Value Chain Product Design Research and Development Securing raw materials and other resources Production Marketing Distribution Customer Service Start
  25. 25. Theory of Constraints <ul><li>A sequential process of identifying and removing constraints in a system. </li></ul>Restrictions or barriers that impede progress toward an objective
  26. 26. Learning Objective 9
  27. 27. Ethical Climate of Business <ul><li>The corporate scandals experienced over the last few years have shown us that u nethical behavior in business 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 corporate governance and accounting. </li></ul>
  28. 28. Learning Objective 10
  29. 29. Managerial Accounting as a Career <ul><li>Professional Organizations </li></ul>Institute of Management Accountants (IMA) Publishes Management Accounting and research studies. Administers Certified Management Accountant program Develops Standards of Ethical Conduct for Management Accountants
  30. 30. Professional Ethics <ul><li>Competence </li></ul><ul><li>Confidentiality </li></ul><ul><li>Integrity </li></ul><ul><li>Credibility </li></ul>
  31. 31. End of Chapter 1