INTRODUCTION: THE ROLE, HISTORY, AND
DIRECTION OF MANAGEMENT ACCOUNTING
QUESTIONS FOR WRITING AND DISCUSSION
A management accounting information sys-
tem is an information system that produces
outputs using inputs and processes needed
to satisfy specific managerial objectives.
The inputs of a management accounting in-
formation system are economic events. The
processes transform the inputs into outputs
and are such things as collecting, measur-
ing, storing, analyzing, reporting, and man-
aging. Typical outputs include special re-
ports, product costs, customer costs, per-
formance reports, budgets, and personal com-
The three objectives of a management ac-
counting information system are as follows:
To provide information for costing out ser-
vices, products, and other objects of interest
to management; to provide information for
planning, controlling, evaluation, and con-
tinuous improvement; and to provide in-
formation for decision making.
All organizations—manufacturing, mer-
chandising, and services—must have a
good management accounting information
system. Management accounting concepts
and procedures are not restricted to any one
type of organization.
The users of management accounting in-
formation are managers and workers within
the organization. Anyone internal to an or-
ganization is a potential user of manage-
ment accounting information.
Management accounting information is used
to cost out objects (for example, services
and products) and to aid in planning, con-
trolling, evaluation, continuous improve-
ment, and decision making.
Both financial and nonfinancial information
should be provided by the management ac-
counting information system. Nonfinancial
information provides insights useful for con-
trolling operations—it is easily used by op-
erational workers. Financial information is
critical for evaluating the success of opera-
Continuous improvement means searching
for ways of increasing overall efficiency and
productivity of activities by reducing waste,
increasing quality, and reducing costs.
Employee empowerment is allowing opera-
tional workers to plan, control, and make
decisions without explicit authorization from
middle- and higher-level managers.
Operational workers must be informed so
that they can evaluate and monitor the ef-
fectiveness of their decisions.
Planning establishes performance stand-
ards, feedback compares actual perform-
ance with planned performance, and con-
trolling uses feedback to evaluate devi-
ations from plans.
Performance reports are formal reports that
compare actual data with planned data or
benchmarks and thus provide signals to
managers that allow them to take corrective