University:
Eastern Kentucky University
Course:
ACC 202 | Introduction to Managerial Accounting
Academic year:

2019
Views:

353

Pages:

2
Author:

vrredneck1346hb

2. MANAGERIAL ACCOUNTING: a. Reports to managers inside the organization for: i. Planning ii. Controlling iii. Decision making b. Emphasizes decisions affecting the future c. Emphasizes relevance d. Emphasizes timeliness e. Emphasizes segment reports f. Need not follow GAAP/IFRS g. Not mandatory. Because of these fundamental differences in users, financial accounting emphasizes the financial consequences of past activities, objectivity and verifiability, precision and company wide performance, whereas managerial accounting emphasizes decisions affecting the future, relevance, timeliness and segment performance. A segment is a part or activity of an organization about which managers would liek cost, revenue or profit data. Examples of business segments include product lines, customer groups (segmented by age, ethnicity, gender, volume of purchases etc., geographic territories, divisions, plants and departments. Financial accounting is mandatory for external reports and it needs to comply with rules, such as generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS), whereas managerial accounting is not mandatory and it does not need to comply with externally imposed rules. MANAGERIAL ACCOUNTING helps managers perform three vital activities 1. planning - the process of establishing goals and specifying how to achieve them. 2. Controlling- the process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change. 3. Decision making- selecting a course of action from competing alternatives. PLANNING: Can require asking numerous questions in part of the planning process. Plans are often accompanied by a budget ( a detailed plan for the future that is usually expressed in formal quantitative terms). CONTROLLING: Process involved in gathering, evaluating and responding to feedback to ensure that year’s recruiting process meets expectations. Part of the control process includes preparing performance reports ( compares budgeted data to actual data in an effort to identify and learn form excellent performance and to identify and eliminate sources of unsatisfactory performance) Performance reports can als be used as one of many inputs to help evaluate and reward employees. DECISION MAKING: -The most basic managerial skills is the ability to make intelligent data driven decisions. -Many of the decisions revolve around the following three questions: 1. What should we be selling? a. What products and services should be the focus of our marketing efforts? b. What new products and services should we offer? c. What prices should we charge for our products and services? d. What products and services should we discontinue? 2. Who should we be serving? a. Who should be the focus of our marketing efforts? b. Who should we start serving? c. Who should pay price premiums or recieve price discounts? d. Who should we stop serving? 3. How should we execute a. How should we supply our parts and services? b. How should we expand our capacity? c. How should we reduce our capacity? d. How should we improve our efficiency and effectiveness?

2. Managerial Accounting

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