Chapter 15 - Managerial Accounting The Changing Business...

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Chapter 15 Author: Anna Rovira Beavers Needles 2008 8/6/07 1 Managerial Accounting The Changing Business Environment: A manager’s Perspective Chapter 15 I. What is Management Accounting? Management accounting consists of accounting techniques and procedures for gathering and reporting financial, production, and distribution data to meet management’s information needs. Management accounting information helps organizations make better decisions. Such decisions make all organizations become more cost-effective and help manufacturing retail, and service organizations become more profitable. Comparing Management and Financial Accounting: Both management and financial accounting: Assists decision makers by identifying, measuring and processing relevant information and communicating this information though reports.
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Chapter 15 Author: Anna Rovira Beavers Needles 2008 8/6/07 2 Provide managers with key measures of a company’s performance Provide managers with cost information for valuing inventories on the balance sheet Primary Uses: 1. Financial Accounting: Owners or stockholders, lenders, customers, governmental agencies. (These are parties outside the organization.) i. Financial accounting takes the actual results of management decisions about operating, investing, and financing activities and prepares financial statements for parties outside the organization. ii. Financial accounting must follow standards and procedures specified by generally accepted accounting principles (GAAP). iii. Must be based on objective and verifiable information. Generally historical and expressed in monetary terms iv. Prepared and distributed periodically, usually quarterly and annually. 2. Management Accounting: May be objective and verifiable expressed in terms of dollar amounts or physical measures of time or objects If needed for planning purposes, may be subjective based on estimates Prepared as often ad needed In-Class SE-1 II. Management Accounting and the Management Process: Management is expected to: Use resources wisely Operate profitably Pay debts Abide by laws and regulations To fulfill these expectations, managers: Establish the goals, objectives, and strategic plans of the organizations Guide and control operating, investing, and financing activities accordingly. Management actions generally follow a four-stage cycle: a. Planning b. Performing c. Evaluating d. Communicating Planning: The key goal of a business is to increase the value of the owner’s interest in the business. For a corporations, this means increasing stockholders’ value The value if the company as represented by the total market value of the shares of stock in the corporation.
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Chapter 15 Author: Anna Rovira Beavers Needles 2008 8/6/07 3 A company’s mission is a statement of the fundamental way in which the company will achieve its goal of increasing the stockholder’s value. The mission statement is essential to the planning process, which must
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Chapter 15 - Managerial Accounting The Changing Business...

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