This week students will: 1. Explain the primary ethical responsibilities of the management accountant.
2. Illustrate the key principles of managerial accounting including cost concepts. 3. Distinguish between the behavior of variable and fixed cost. 4. Explain the significance of cost behavior to decision making and control. 5. Determine the necessary sales in unit and dollars to break-even or attain desired profit using the break-even formula.
FINANCIAL VS MANAGERIAL ACCOUNTING-
Financial accounting is the branch of accounting that organizes accounting information for presentation to interested parties outside of the organization. The primary financial accounting reports are the balance sheet (often called a statement of financial position), the income statement, and the statement of cash flows. The balance sheet is a summary of assets, liabilities, and shareholders’ equity at a specified point in time. The income statement reports revenues and expenses resulting from the company’s operations for a particular time period. The statement of cash flows shows the sources and uses of cash over a time period for operating, investing, and financing activities.
Managerial accounting is the branch of accounting that meets managers’ information needs. Because managerial accounting is designed to assist the firm’s managers in making business decisions, relatively few restrictions are imposed by regulatory bodies and generally accepted accounting principles. Therefore, a manager must define which data are relevant for a particular purpose and which are not.
In managerial accounting, however, the segment is of major importance. Segments may be products, projects, divisions, plants, branches, regions, or any other subset of the business. Tracing or allocating costs, revenues, and assets to segments creates difficult issues for managerial accountants.
Two important similarities do exist.