Chapter 1
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

1. Users
Financial Accounting Managerial Accounting
External persons who Managers who plan for make financial decisions and control an organization
2. Time focus Historical perspective
3. Verifiability Emphasis on
versus relevance objectivity and verifiability
4. Precision versus
timeliness
5. Subject
6. Rules
7. Requirement
Emphasis on precision
Primary focus is on companywide reports
Must follow GAAP / IFRS and prescribed formats
Mandatory for external reports
Future emphasis
Emphasis on relevance
Emphasis on timeliness
Focus on segment reports
Not bound by GAAP / IFRS or any prescribed format
Not
Mandatory
1-2

Planning
Controlling
Decision
Making
1-3

Establish Goals.
Specify How Goals
Will Be Achieved.
Develop Budgets.
1-4

The control function gathers feedback to ensure that plans are being followed.
Feedback in the form of performance reports that compare actual results with the budget are an essential part of the control function.
1-5

Decision making involves making a selection among competing alternatives.
What should we be selling?
Who should we be serving?
How should we execute?
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1-7
The IMA estimates that more than
80% of professional accountants in the U.S. work in non-public accounting environments.
80%
Employers expect accounting majors to have strong financial accounting skills, but they also expect application of the planning, controlling, and decision making skills that are the foundation of managerial accounting.

A management accountant who has the necessary qualifications and who passes a rigorous professional exam earns the right to be known as a
Certified Management Accountant
(CMA).
1-8

Managerial Accounting: Beyond the
Numbers
The primary purpose of this course is to teach measurement skills that managers use to support planning, controlling, and decision making activities.
Planning
Controlling
Decision
Making
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1-10
Managerial Accounting: Beyond the
Numbers
Measurement skills help managers answer important questions.
What net income should my company report to its stockholders?
Measure and report historical data that complies with applicable rules.
How will my company serve its customers?
Measure and analyze mostly nonfinancial, process-oriented data.
Will my company need to borrow money?
Measure and analyze estimated future cash flows.

Managerial Accounting: Beyond the
Numbers
Six Business Management Perspectives that go beyond the numbers to enable intelligent planning, control, and decision making:
• An Ethics Perspective
• A Strategic Management Perspective
• An Enterprise Risk Management Perspective
• A Corporate Social Responsibility Respective
• A Process Management Prospective
• A Leadership Perspective
1-11

The Institute of Management Accountant’s (IMA)
Statement of Ethical Professional Practice provides guidelines for ethical behavior.
Recognize and communicate professional limitations that preclude responsible judgment.
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Maintain professional competence.
Competence
Follow applicable laws, regulations, and standards.
Provide accurate, clear, concise, and timely decision support information.

A Strategic Management Perspective
A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.
The focal point of a company’s strategy should be its target customers.
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An Enterprise Risk Management
Perspective
Should I try to avoid the risk, accept the risk, or reduce the risk? A process used by a company to proactively identify and manage risk.
1-14
Once a company identifies its risks, perhaps the most common risk management tactic is to reduce risks by implementing specific controls.

A Corporate Social Responsibility
Perspective
Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions.
1-15
Customers Employees Suppliers Communities Stockholders
Environmental
& Human Rights
Advocates
CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.

A Process Management Perspective
A business process is a series of steps that are followed in order to carry out some task in a business.
Product Customer
R&D Design Manufacturing Marketing Distribution Service
Business functions making up the value chain
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Organizational leaders unite the behavior of employees around two common themes —pursuing strategic goals and making optimal decisions.
Factors that influence behavior:
• Intrinsic Motivation
• Extrinsic Incentives
• Cognitive Bias
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