Management accounting focuses on providing information to managers to aid in planning, controlling, evaluating performance, and decision making. It assists with routine operations, long-term planning, inventory valuation, and income determination. The planning and control process involves setting standards, measuring actual performance, and comparing the two. Management decision making identifies problems, objectives, alternative solutions, consequences of each, and selects an alternative. Management accounting differs from financial accounting in its internal focus, special purpose reports, consideration of future plans, and allowance for subjective data. Areas not governed by accounting principles include identifying relevant decisions and organizing the most useful information.

1. Management Accounting

2. Management Accounting
• Focuses on providing information to managers
to help them in fulfilling their functions of
planning, controlling, performance evaluation
and decision making.

3. Purpose of Management Accounting
1. Planning and controlling routing operations
2. Non-routine decisions, policy making, and
long-range planning.
3. Inventory valuation and income
determination

4. Planning and Control Process Includes
1. Decide on a standard budget specifying what
actual performance should be
2. Measure the results of actual performance
3. Compare actual performance with the
standard or budget.

5. Management Decision Making
Includes
1. Identifying the problem requiring managerial
action.
2. Specify the objective or goal to be achieve
3. List the possible alternative courses of action
4. Gather information about the consequences
of each alternative
5. Make a decision by selecting one of the
alternatives.

6. Distinction Between Management
Accounting and Financial Accounting
Management Accounting Financial Accounting
Info to internal users Info to external users
Special purpose reports General purpose reports
Past or outline future plans Reports on past activities
No subject to standards must conform to standards
Allows a subjective data objective data

7. Areas not controlled in Management
Accounting by Generally Accepted
Accounting Principles
1. Identifying the decisions to be made
2. Identifying the information that is relevant to
the decision making process, and
3. Organizing the information that is most
useful to the management.

8. Cost and Managerial Accounting
 The primary objective of Cost and Managerial
Accounting is to assist in planning and control
functions of internal decision makers.
 In contrast, Financial Accounting is primarily
concerned with the information needs
external decision makers.

9. Managerial Accountants
Managerial accountants in business includes
personnel in the controller’s office, as well as
budget analysts, cost analysts and financial
analysts.

10. The specific duties of managerial accountants
include :
1. Assisting in the design of the organization’s
information system.
2. Ensuring that the system performs
adequately.
3. Periodically reporting information to
interested managers, and
4. Undertaking special analyses.

11. Definition of Terms
Management (Managerial) Accounting – It is
concerned with providing information to
management that will be useful in making decisions
about the operations of the business.
Management by Exception – It means that the
executives attention and effort are concentrated on
the significant deviations from expected results and
that the information system highlights areas most in
need of investigation.

12. Management by Objective – A management
approach designed to focus on the definition
and attainment of overall and individual
objectives with the participation of all levels of
management.
Planning – involves the establishment of goals
and selection of courses of actions (decision
models) to achieve those goals.

13. Planning and Control Cycle – the flow of
management activities through the steps of
planning, organizing and directing, controlling
and then back to planning again.
Controlling – is the officer who has the overall
responsibility for all the accounting activities
within the organizaiton.

14. Controllership – Is the practice of the
established science of control, which is the
process by which management assures itself
that the resources utilized according to plans, in
order to achieve the company’s objectives.