Managerial Accounting, Its Importance and Objectives.docx

**Managerial Accounting: Its Importance & Objectives** Accounting is identifying, measuring, analyzing, interpreting, and communicating financial and non financial information to managers for the pursuit of an organization\'s goals. I would like to emphasize in the definition, it\'s financial and n...

**Managerial Accounting: Its Importance & Objectives** Accounting is identifying, measuring, analyzing, interpreting, and communicating financial and non financial information to managers for the pursuit of an organization\'s goals. I would like to emphasize in the definition, it\'s financial and non financial, managers are internal employees managerial accounting creates documents and reports to aid management in decision making processes to improve the company\'s performance. So here, class, managerial accounting, is a tool to ensure that management will be provided with certain analysis in order for them to make the decision. Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Examples are, information relating to the cost and sales revenue of goods and services information on total cost of production by assessing the variable cost of each step of production as well as fixed cost. identify and reduce unnecessary spending and maximize profits. Those are the three things that the examples that we can apply managerial accounting. So why students study managerial accounting? Why you need to study managerial accounting as a student? First, to understand the information provided by an accounting system and enhance the use of managerial accounting. Of course, you are not the one engaged directly in the accounting system. It is the accountant. However, you have to know what can you extract from the accounting system, what information as an IE, and what information you may be able to secure or get from the accounting system. Next, to have a solid working knowledge of managerial accounting for future career. That\'s a straightforward thing. And third, to apply financial tools and techniques in making decisions and in maintaining efficient, effective, and profitable business operations. Here we will learn what financial tools and techniques you can use to make an analysis. So you can provide quantitative information in making a decision. Question we will answer in this video. Why businesses need managerial accounting. First customers are placing increased importance on price and quality of service due to increasing competition. Nowadays, the environment is very competitive. So we need managerial accounting. to better provide. service to our customers. next, the industry is focused on increasing revenue, minimizing costs and maximizing profit without reducing the quality of service. So businesses need accounting, so they will be able to evaluate, analyze. the existing situation for opportunities that could possibly increase revenue, minimize cost. Thus, maximizing profit. It\'s 11 o\'clock. Companies plan of increasing growth of operations. That is, new and expanded products and services. to improve your product, your services, and for you to grow, you need to expand. Why businesses need managerial accounting and we have to answer what are the objectives of managerial accounting? The first objective is planning set plans and goals Okay And with that management accounting assist management in planning the activities of the business planning Planning is deciding in advance what is to be done, when it is to be done, how it is to be done, and by whom it is to be done. So that is basically the meaning of planning. managerial accounting assists management in planning the activities of the business. planning involves forecasting on the basis of available information. Setting goals, framing policies, determining the alternative courses of actions, and deciding on the activities to be undertaken. Planning helps in the overall study of organizational structure with the use of budgeting, responsibility accounting, cost control, and internal financial controls. So planning helps in all of these things. Let\'s move on. The second objective of monetarial accounting is decision making. What is decision making? To provide quantitative analysis of financial and non financial data in making decisions. The decision that we have to undertake should be based on quantitative analysis, meaning numbers. If we will pursue a certain company\'s goal. It has to be looking forward to a positive value in terms of monetary value. If it will increase profit, increase revenue, or reduce cost, then we have to make a quantitative analysis for our decision. Managerial accounting provides input on the following. How to start a new business. Second, expanding or diversifying the existing business. Then the other information that can be provided would be whether labor should be replaced by machinery or not, whether selling price should be reduced or not, whether to export the item or not, and many more. So these are the basic examples on how managerial accounting can provide input. Next, controlling. To evaluate whether actual performance conform with planned goals. And in this, management accounting is a useful device of managerial control. What are the things that we can consider under this? Organization is divided into responsibility centers. And each center is put under the charge of a responsible person. The responsible person will be engaged with the planning and budgeting and be required to execute the plans and budgets. Then, if the responsibility centers already have a budget, they could measure the performance by comparing the budget with the actual performance, if there are deviations, you can make certain actions how to immediately control. If it is a negative deviation, then you can make certain action of how you can control such deviation. Next, measuring the performance of responsibility centers will increase the effectiveness of the organization and motivate employees. Fourth is safeguarding of assets to maximize the use of company\'s resources. under this, management accounting is a useful tool in coordinating the various operations of the business. to avoid redundancy and establish an efficient and coordinated flow of operations, management accounting provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition. use or disposition of the company\'s assets, particularly assets that could have a material effect on the financial statements. through managerial accounting, we can, institute certain controls in safeguarding of assets. In particular, detection if there are unauthorized use or disposition. These are the things that managerial accounting can be helpful. Last is reporting, to communicate results to users of information. if we have done the analysis, we have to communicate the results to the end users. Since accounting is a technical subject Management accounting assists management in communicating the financial facts about the enterprise in a layman\'s term so that responsible persons may be guided to a line of action to be pursued. Accounting is a technical area. It\'s a separate language actually. But with the help of management accounting, the management accountant can provide an analysis that will be understandable to the user. in a layman\'s term so that the users, for example, you are a supervisor of production department. If you are worried or concerned about the increasing cost of production, then the management account can provide information that would be understandable as a production supervisor. So, it can be explained by the accountant. The required information can be made available to the management by means of reports, which are an integral part of the management account.