why managerial accounting is important

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Chapter 1 Lecture Notes Chapter theme: This chapter explains why managerial accounting is important to the future careers of all business students. It answers three questions: (1) What is managerial accounting? (2) Why does managerial accounting matter to your career? and (3) What skills do managers need to succeed? It also discusses the importance of ethics in business and corporate social responsibility. I. What is managerial accounting?
A. Examine the difference between Financial and managerial accounting • Financial accounting reports are prepared for external parties, whereas managerial accounting reports are prepared for internal users. • Financial accounting summarizes past activities. Managerial accounting has a strong future orientation. • Financial accounting data should be objective and verifiable. Managerial accountants focus on providing relevant data even if these data are not completely • Financial accounting focuses on precision when reporting to external parties. Managerial accounting aids decision makers by providing good estimates as soon as possible rather than waiting for precise data later. • Financial accounting is concerned with companywide reports. Managerial accounting focuses on segment reports. Examples of segments include: • Financial accounting conforms to GAAP and IFRS. Managerial accounting is not bound by GAAP and IFRS. • Financial accounting is mandatory because various outside parties require periodic financial statements. Managerial accounting is not mandatory. B. Activities of managers • Planning • Controlling • Decision making II. Why does managerial accounting matter to your career?
A. For all Business majors • It helps to answer important planning questions: budgeting, allocation of staff, purchasing inventory, production

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