W3-class materials - ole of Managerial Accounting in...

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Unformatted text preview: ole of Managerial Accounting in Organizations Decision- Making Orientation The purpose of managerial accounting is to provide useful information to internal managers to help them make decisions that arise as they manage people, projects, products, or segments of the business. 1 Learning Objective 1 Identify the major Identify the major differences and similarities differences and similarities between financial and between financial and managerial accounting. managerial accounting. What is Accounting? What is Accounting? What is Accounting? The purpose of accounting is to: (1) (1) identify identify , record record , and communicate communicate the economic events of an (2) organization to (3) interested users. The Accounting System ollects and processes financial information Reports information to decision makers Managers (internal decision makers) Investors and Creditors (external decision makers) The Accounting System Accounting System Financial Accounting System Periodic financial statements and related disclosures Managerial Accounting System Detailed plans and continuous performance reports External Decision Makers Investors, creditors, suppliers, customers, etc. Internal Decision Makers Managers throughout the organization Describe the key differences between financial accounting and managerial accounting. 6 Comparison of Financial and Managerial Accounting Financial Accounting Managerial Accounting 1. Users External persons who Managers who plan for make financial decisions and control an organization 2. Time focus Historical perspective Future emphasis 3. Verifiability Emphasis on Emphasis on relevance versus relevance verifiability for planning and control 4. Precision versus Emphasis on Emphasis on timeliness precision timeliness 5. Subject Primary focus is on Focuses on segments the whole organization of an organization 6. GAAP Must follow GAAP Need not follow GAAP and prescribed formats or any prescribed format 7. Requirement Mandatory for Not external reports Mandatory Prestudy-1 Managerial accounting: A. has its primary emphasis on the future. B. is required by regulatory bodies such as the SEC. C. focuses on the organization as a whole, rather than on the organization's segments. D. Responses a, b, and c are all correct. Prestudy-2 Managerial accounting places considerable weight on: A) generally accepted accounting principles. B) the financial history of the entity. C) ensuring that all transactions are properly recorded. D) detailed segment reports about departments, products, and customers. Work of Management Planning Planning Controlling Controlling Directing and Motivating Directing and Motivating Planning Identify alternatives....
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W3-class materials - ole of Managerial Accounting in...

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