Acct 611 CHAPTER 1 - 4 Notes

Acct 611 CHAPTER 1 - 4 Notes - CHAPTER1*...

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CHAPTER 1* THE CHANGING ROLE OF MANAGERIAL  ACCOUNTING IN A DYNAMIC BUSINESS ENVIRONMENT 1. ORGANIZATIONS Types of organizations include manufacturers, retailers, service providers,  agribusinesses, and nonprofit firms.  These organizations have goals—for  example: growth, profit, quality, leadership, etc. Organizations have information needs in the financial, production, personnel,  environmental, and legal areas.  Managerial accounting provides some of this  information.   Managerial accounting  is the process of identifying, measuring,  analyzing, interpreting, and communicating information in pursuit of an  organization's goals.  The role of managerial accountants has expanded in recent years.  Formerly in  staff positions, managerial accountants now serve as internal business consultants,  trusted advisors, and "business partners." Management functions performed within an organization can often be  summarized as decision making, planning, the directing of operational activities,  and controlling. Decision making— the   process of choosing among available alternatives Planning— developing   a detailed financial and operational description of  anticipated operations 1
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Directing operational activities— running   the organization on a day-to- day basis Controlling— ensuring   that the organization operates in the intended  manner to achieve its goals 2. HOW MANAGERIAL ACCOUNTING ADDS VALUE  Provides managers with information (e.g., product costs, budgets, cash flows).  The information includes financial and nonfinancial data to help managers with  strategic planning and decision making. Assists in directing and controlling (analyzing and comparing actual performance  to budgeted plans;  attention-directing  to highlight successful or problem areas). Motivates managers to achieve the organization's goals by communicating the  plans, providing a measurement of how well the plan was achieved, and  prompting an explanation of deviations from plans. Motivation is achieved, in part, through  employee empowerment— the  concept of   encouraging and authorizing workers to improve operations,  reduce costs, and improve product quality and customer service. Measures performance not only for the entire organization, as in financial  accounting, but also for many subunits (divisions, departments, managers). Assesses the organization's competitive position in the rapidly changing business  environment.  Looks at how well the firm is doing internally, in the eyes of its  customers, from the standpoint of innovation and continuous improvement, and  financially.   2
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The preceding factors are integrated in a model of performance evaluation 
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This document was uploaded on 02/15/2011.

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Acct 611 CHAPTER 1 - 4 Notes - CHAPTER1*...

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