Management Aounting Management - the planning and integration of effort, judicious use of resources, motivation of people, and the provision of leadership in order to guide an organization toward its goals and objectives in an efficient manner GOALS vs. OBJECTIVES Goal - outcome Objectives - actions to take to achieve the goal SMART Specific Measurable Attainable Realistic Time-bound Basic functions. PDCA cycle (deming wheel) and decision making BASIC FUNCTIONS PDCA CYCLE Planning Plan Organizing Do Leading Check Controlling Act Decision making • to carry out the management functions, managers are engaged in a continuous process of making decisions. Managers decide when they plan, organize, lead and control. They plan when they organize and by leading they are controlling. • management = decision making MANAGEMENT PROCESS Planning • setting objectives • identify ways to achieve the objectives Controlling • monitoring a plan's implementation • feedback is information used to evaluate or correct implementation of a plan Decision making • choosing among competing alternatives MANAGEMENT ACCOUNTING VS. FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING • internal users (managers) • no mandatory rules for preparing reports • financial and non financial information • emphasize future • detailed info about product line, departments, etc • The accounting system should be flexible enough to supply different information for different users and different purposes. Frequently the reports of both management accounting and financial accounting are derived from the same database, which was originally established to support the reporting requirements of financial accounting. FINANCIAL ACCOUNTING • external users stockholders and creditors • must follow GAAP when preparing FS • financial information • historical orientation • information about overall firm performance Cost Accounting in Relation to Management and Financial Accounting Financial Accounting Information Cost Accounting Data • Cost accounting acts as a bridge between financial accounting and management accounting. Managerial Accounting Information
