Unit1 DB2 AMA
SteelTiger4
SPPTChap001Unit11.pptPowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Managerial Accounting:
An Overview
Chapter 1
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Financial and Managerial Accounting: Seven Key Differences
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| 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 | |
| versus relevance | objectivity and verifiability | relevance | |
| 4. Precision versus | Emphasis on | Emphasis on | |
| timeliness | precision | timeliness | |
| 5. Subject | Primary focus is on | Focus on | |
| companywide reports | segment reports | ||
| 6. Rules | Must follow GAAP / IFRS | Not bound by GAAP / IFRS | |
| and prescribed formats | or any prescribed format | ||
| 7. Requirement | Mandatory for | Not | |
| external reports | Mandatory |
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Work of Management
Planning
Decision
Making
Controlling
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Planning
Establish Goals.
Specify How Goals
Will Be Achieved.
Develop Budgets.
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Controlling
The control function gathers feedback to
ensure that plans are being followed.
Feedback in the form of performance reports
that compare actual results with the budget
are an essential part of the control function.
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Decision Making
Decision making involves
making a selection among
competing alternatives.
What should
we be selling?
Who should
we be serving?
How should
we execute?
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Accounting Majors
Employers expect accounting majors to have strong financial accounting skills, but they also expect application of the planning, controlling, and decision making skills that are the foundation of managerial accounting.
The IMA estimates that more than 80% of professional accountants in the U.S. work in non-public accounting environments.
80%
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Certified Management Accountant
A management accountant
who has the necessary qualifications
and who passes a rigorous professional
exam earns the right to be known as a
Certified Management Accountant
(CMA).
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Managerial Accounting: Beyond the Numbers
Controlling
Planning
Decision
Making
The primary purpose of this course is to teach measurement skills that managers use to support planning, controlling, and decision making activities.
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Managerial Accounting: Beyond the Numbers
Measurement skills help managers answer important questions.
What net income should my company report to its stockholders?
Measure and report historical data that complies with applicable rules.
How will my company serve its customers?
Measure and analyze mostly non-financial, process-oriented data.
Will my company need to borrow money?
Measure and analyze estimated future cash flows.
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Managerial Accounting: Beyond the Numbers
Six Business Management Perspectives that go beyond the numbers to enable intelligent planning, control, and decision making:
- An Ethics Perspective
- A Strategic Management Perspective
- An Enterprise Risk Management Perspective
- A Corporate Social Responsibility Respective
- A Process Management Prospective
- A Leadership Perspective
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An Ethics Perspective
Competence
Follow applicable
laws, regulations,
and standards.
Maintain professional competence.
Provide accurate, clear, concise, and timely decision support information.
Recognize and communicate professional limitations that preclude responsible judgment.
The Institute of Management Accountant’s (IMA) Statement of Ethical Professional Practice provides guidelines for ethical behavior.
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A Strategic Management Perspective
A strategy
is a “game plan”
that enables a company
to attract customers
by distinguishing itself
from competitors.
The focal point of a
company’s strategy should
be its target customers.
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An Enterprise Risk Management Perspective
A process used
by a company to
proactively identify
and manage risk.
Once a company identifies its risks, perhaps the
most common risk management tactic is to reduce
risks by implementing specific controls.
Should I try to avoid the risk, accept the risk, or reduce the risk?
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A Corporate Social Responsibility Perspective
CSR extends beyond legal compliance
to include voluntary actions that satisfy
stakeholder expectations.
Corporate social responsibility (CSR) is a concept
whereby organizations consider the needs
of all stakeholders when making decisions.
Customers
Employees
Communities
Suppliers
Stockholders
Environmental
& Human Rights
Advocates
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A Process Management Perspective
A business
process is a series of
steps that are followed in order to
carry out some task in
a business.
Product Customer
R&D Design Manufacturing Marketing Distribution Service
Business functions making up the value chain
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A Leadership Perspective
Organizational leaders unite the behavior of employees around two common themes—pursuing strategic goals and making optimal decisions.
Factors that influence behavior:
- Intrinsic Motivation
- Extrinsic Incentives
- Cognitive Bias
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End of Chapter 1
Financial AccountingManagerial Accounting
1. UsersExternal persons whoManagers who plan for
make financial decisionsand control an organization
2. Time focusHistorical perspectiveFuture emphasis
3. VerifiabilityEmphasis onEmphasis on
versus relevanceobjectivity and verifiabilityrelevance
4. Precision versusEmphasis on Emphasis on
timelinessprecisiontimeliness
5. SubjectPrimary focus is onFocus on
companywide reportssegment reports
6. RulesMust follow GAAP / IFRSNot bound by GAAP / IFRS
and prescribed formatsor any prescribed format
7. RequirementMandatory forNot
external reportsMandatory
