Outline of Chapter 1 Accounting

Topics: Management accounting, Management, Accountancy Pages: 3 (838 words) Published: July 24, 2014
1) Managerial Accounting: Firms internal accounting system and designed to support the information needs of managers in order to make decisions. Not bound by GAAP. a) Managerial accounting has 3 objectives:

i) To provide information for planning organization actions
ii) To provide information for controlling organization actions. iii) To provide information for making effective decisions.
b) Reports that help mangers that are nonfinancial are: managerial internal reports, corporate sustainability reports, social responsibility reports or citizenship reports. c) Managerial accounting concentrates on 3 elements: Planning, Controlling and decision making. i) Planning: formulation of action to achieve particular goal. It requires setting objectives and identifying methods to achieve those goals ii) Controlling: monitoring the plans and making sure that those plans are being implemented efficiently. Usually achieved by comparing actual performance with expected performance. iii) Decision making: Choosing among competing alternatives. Goals of managerial accounting are to supply information that facilitates decision making. 2) Financial accounting vs managerial accounting.

a) Financial Accounting: Producing financial information for external users (investor’s creditors, customers, suppliers and government agencies). Financial accounting uses GAAP to stay in check with FASB, IASB and SEC. b) Managerial Accounting: Internal Accounting. It identifies, collects, measures, classifies and reports financial and nonfinancial information that it is used to internal users in planning controlling and decision making. 3) Difference between Financial Accounting and Managerial Accounting. a) Targeted users:

i) Managerial accounting provides information to internal users: managers, workers and sometimes customers. ii) Financial accounting: provides information to external users: creditors, investors, customers and suppliers....
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