acct2120ch20.DOC.docVIP

Managerial Accounting focuses primarily on the preparation of reports for internal users, such as the managers and officers of a company. These reports are an integral part of managerial accounting. Managerial accounting provides techniques for assisting management in making decisions and tools for evaluating the effectiveness of those decisions. Managerial Accounting Basics Managerial accounting, also called management accounting, is a field of accounting that provides economic and financial for managers and other internal users. The activities that are part of managerial account are as follows: Explaining manufacturing and nonmanufacturing costs and how they are reported in the financial statements Computing the cost providing a service or manufacturing a product Determining the behavior of costs and expenses as activity levels change and analyzing cost - volume - profit relationships within a company. Assisting management in profit planning and formalizing these plans in the form of budgets. Providing a basis for controlling costs and expenses by comparing actual results with planned objectives and standard costs. Accumulating and presenting relevant data for management decision making. Today the managerial accounts responsibilities extend to strategic cost management – providing managers with data on the efficient use of company resources in both manufacturing and service industries. Study Objective 1 -- Explain the distinguishing features of managerial accounting. Comparing Managerial and Financial Accounting Differences between financial and managerial accounting Financial Accounting Managerial Accounting External users; stockholders, creditors, and regulators Primary Users Of Reports Internal users; officers, department heads, managers, and supervisors Classified financial statements. Issued quarterly and annually Types and Frequency Of Reports Internal reports Issued as frequently as needed General-purpose information for all users Purpose of Report