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Managerial Accounting Notes

Managerial Accounting Notes - Managerial Accounting I...

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Managerial Accounting I. Chapter 1 a. Managerial Accounting is the process of Identifying, Measuring, Analyzing, Communicating, and Interpreting information b. Management Team i. Collects resources, hires people, and engages them in an organized set of activities ii. It is up to the management team to learn the best use of the organization’s resources, activities, and people in achieving the organization’s goals iii. Day-to-day work of the management team comprises of four activities: 1. Decision making 2. Direction in operational activities 3. Planning 4. Controlling c. Managerial accountants add value to this process by: i. Providing information for decision making and planning ii. Assisting mangers in planning and controlling iii. Motivating managers and employees towards the organization’s goals iv. Measuring the performance of activities, managers, and other employees v. Assessing the organization’s competitive position d. The Balanced Scorecard (of business performance evaluation) i. Financial Perspective (How to we look to owners?) ii. Customer Perspective (How do customers see us?) iii. Operations Perspective (In which activities must we excel?) iv. Innovation Perspective (What can we do to improve?) v. In order to remain viable, managers must continually ask these questions in a changing business environment. e. Managerial vs. Financial Accounting i. Managerial provides information for internal decisions and users ii. Financial provides information for external decisions and users f. Line vs. Staff Positions i. Line positions are directly involved in providing goods and services, ii. Staff positions support the line positions iii. Managerial accountants are staff positions that need to work closely with line management. g. Controller/CFO i. Responsible for supervising accounting personnel ii. Preparing both the managerial and financial accounting reports iii. Analysis of the accounting information iv. Planning and decision-making related to the acc’ting info.
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h. Treasurer i. Responsible for raising capital and safeguarding the organization’s assets ii. Supervises relationships with financial institutions iii. Work with investors and potential investors iv. Manages investments v. Establishes credit policies vi. Manages insurance coverage i. Internal Auditor i. Responsible for reviewing accounting procedures, records, and reports, and records in both the controller’s and the treasurer’s area of responsibility ii. Expresses an opinion to top management regarding the effectiveness of the organizations of the accounting system j. Themes of Managerial Accounting i. Information and Incentives 1. Driven by the need for information, but also intended to influence management’s decisions ii. Behavioral Issues 1. A better understanding of human behavior can lead the managerial accountant to be a much better provider of information iii. Costs and benefits 1. Compensation of personnel, purchasing computers iv. Evolution and Adaptation 1. As business environments change, accounting tools must be adapted k.
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