Management Accounting PDF

Objectives, Role, and Scope of Management Accounting Junie C. Cruz  Management Accounting the use of accounting information by company management to make rational economic decisions in performing its function of planning, organizing and controlling business operations. Management Acc...

Objectives, Role, and Scope of Management Accounting Junie C. Cruz  Management Accounting the use of accounting information by company management to make rational economic decisions in performing its function of planning, organizing and controlling business operations. Management Accounting vs Financial Accounting  User of Information Financial Accounting Management Accounting Primarily for external users Exclusively for internal users  Purpose/End Result Financial Accounting Management Accounting Financial reporting and compliance Management decision-making  Guiding Principles Financial Accounting Management Accounting Accounting standards (PFRS) Management wants and needs  Type of Information Financial Accounting Management Accounting Primarily monetary in nature Monetary and nonmonetary  Time Orientation Financial Accounting Management Accounting Historical Future oriented using past data  Emphasis of Reports Financial Accounting Management Accounting Reliability (precision, verifiability) Relevance (timeliness)  Amount of Details Financial Accounting Management Accounting Aggregated and simplified Detailed and extensive  Focus of Information Financial Accounting Management Accounting Business as a whole Various business segments  Frequency of Reports Financial Accounting Management Accounting Periodic (annually, quarterly) Whenever needed KNOWLEDGE CHECK The main purpose of management accounting is to a. Assess past performance b. Help managers make decisions c. Project future transactions d. Help investors & creditors make decisions The main purpose of management accounting is to a. Assess past performance b. Help managers make decisions c. Project future transactions d. Help investors & creditors make decisions Management accounting is similar to financial accounting in that a. Both are concerned with monetary information only b. Both classify reported information in the same way c. Both focus on business as a whole d. Both deal with economic events Management accounting is similar to financial accounting in that a. Both are concerned with monetary information only b. Both classify reported information in the same way c. Both focus on business as a whole d. Both deal with economic events In comparing financial and management accounting, which of the following more accurately describes management accounting information? a. Historical, precise, useful b. Comparable, verifiable, monetary c. Required, estimated, internal d. Budgeted, informative, adaptable In comparing financial and management accounting, which of the following more accurately describes management accounting information? a. Historical, precise, useful b. Comparable, verifiable, monetary c. Required, estimated, internal d. Budgeted, informative, adaptable  Management Functions PLANNING ORGANIZING CONTROLLING deciding on company goals deciding on how to use deciding on what corrective and objectives and figures company resources to put actions to do should there be out how to achieve them. plans into action. any difference between actual results and planned results WHAT DID YOU NOTICE?  “DECIDING” Decision-making is an inherent function of management as all management functions would require a certain level of decision-making; this makes management accounting information useful in all stages of management.  LINE VS STAFF FUNCTION LINE FUNCTION STAFF FUNCTION is the authority to give orders is the authority to advise but not exercises direct downward to command others authority over line departments is commonly exercised laterally Example: VP for operations over or upward in an organization operations manager Example: staff managers provide support via advice and assistance to other managers Which of the following is most likely a line function? a. VP for Research of a conglomerate firm b. Store manager of a retail convenience outlet c. Chief financial officer of a merchandising company d. Human resources manager for an educational institution Which of the following is most likely a line function? a. VP for Research of a conglomerate firm b. Store manager of a retail convenience outlet c. Chief financial officer of a merchandising company d. Human resources manager for an educational institution Determine the false statement. a. Both line and staff functions are depicted on the organizational chart. b. Line functions are directly related to the basic objectives of an organization. c. Staff managers always have authorities over persons occupying line functions. d. Line units or departments tend to have more employees than staff units or departments. Determine the false statement. a. Both line and staff functions are depicted on the organizational chart. b. Line functions are directly related to the basic objectives of an organization. c. Staff managers always have authorities over persons occupying line functions. d. Line units or departments tend to have more employees than staff units or departments.  CONTROLLER VS TREASURER CONTROLLER TREASURER Planning and control Provision of capital Financial Reporting Investor relations Evaluating and consulting Short-term financing Tax administration Banking and custody Government reporting Credit and collections Protection of assets Investments  Insurance Economic appraisal CONTROLLERS are usually not concerned with a. Government reporting b. Tax administration c. Investor relations d. Data processing CONTROLLERS are usually not concerned with a. Government reporting b. Tax administration c. Investor relations d. Data processing TREASURERS are usually not concerned with a. Tax planning b. Short-term financing c. Cash custody and banking d. Credit extension and collection of bad debts TREASURERS are usually not concerned with a. Tax planning b. Short-term financing c. Cash custody and banking d. Credit extension and collection of bad debts  NEXT TOPIC Cost Terms, Concepts, Classification and Behavior Thank You