Management Accounting

Management Accounting
Focuses on providing information to managers
to help them in fulfilling their functions of
planning, controlling, performance evaluation
and decision making.

Purpose of Management Accounting

1. Planning and controlling routing operations
2. Non-routine decisions, policy making, and
long-range planning.
3. Inventory valuation and income
determination

Planning and Control Process Includes

1. Decide on a standard budget specifying what
actual performance should be
2. Measure the results of actual performance
3. Compare actual performance with the
standard or budget.

Management Decision Making

Includes
1. Identifying the problem requiring managerial
action.
2. Specify the objective or goal to be achieve
3. List the possible alternative courses of action
4. Gather information about the consequences
of each alternative
5. Make a decision by selecting one of the
alternatives.

Distinction Between Management

Accounting and Financial Accounting
Management Accounting
Info to internal users
Special purpose reports
Past or outline future plans
No subject to standards
Allows a subjective data

Financial Accounting
Info to external users
General purpose reports
Reports on past activities
must conform to standards
objective data

Areas not controlled in Management

Accounting by Generally Accepted
Accounting Principles
1. Identifying the decisions to be made
2. Identifying the information that is relevant to
the decision making process, and
3. Organizing the information that is most
useful to the management.

Cost and Managerial Accounting

The primary objective of Cost and Managerial
Accounting is to assist in planning and control
functions of internal decision makers.
In contrast, Financial Accounting is primarily
concerned with the information needs
external decision makers.

Managerial Accountants
Managerial accountants in business includes
personnel in the controllers office, as well as
budget analysts, cost analysts and financial
analysts.

The specific duties of managerial accountants

include :
1. Assisting in the design of the organizations
information system.
2. Ensuring that the system performs
adequately.
3. Periodically reporting information to
interested managers, and
4. Undertaking special analyses.

Definition of Terms
Management (Managerial) Accounting It is
concerned with providing information to
management that will be useful in making decisions
about the operations of the business.
Management by Exception It means that the
executives attention and effort are concentrated on
the significant deviations from expected results and
that the information system highlights areas most in
need of investigation.

Management by Objective A management

approach designed to focus on the definition
and attainment of overall and individual
objectives with the participation of all levels of
management.
Planning involves the establishment of goals
and selection of courses of actions (decision
models) to achieve those goals.

Planning and Control Cycle the flow of

management activities through the steps of
planning, organizing and directing, controlling
and then back to planning again.

Controlling is the officer who has the overall

responsibility for all the accounting activities
within the organizaiton.

Controllership Is the practice of the

established science of control, which is the
process by which management assures itself
that the resources utilized according to plans, in
order to achieve the companys objectives.