Accounting for Managers Module 5 Managerial Accounting in

Accounting for Managers Module 5: Managerial Accounting in Business

Financial and Managerial Accounting

Differentiating Between Financial and Managerial Accounting Financial accounting focuses on recording transactions as they occur, and is done for people outside of the country. Managerial accounting , on the other hand, is to provide information to managers within the organization. It is used for planning, controlling, and decision making.

Managerial Accounting 3 Primary Components of Managerial Accounting: 1. Planning 2. Controlling 3. Decision Making

Relationship Between Financial and Managerial Accounting • Financial accounting records are the basis for what is used in managerial accounting. • Financial and managerial teams need to work together to create the • information needed for planning, controlling, and decision making within the country. Managerial teams need historical data from the financial teams to prepare their reports.

Managerial Accounting Perspectives

Accounting Decision Makers Marketing Department Managers Need an understanding of managerial accounting concepts Manufacturing Department Managers involved in the day to day manufacturing process Human Resources Managers Need to pay extra attention to planning Top Management Will generally be more involved with the big picture • •

Strategy Development • A strategy is a game plan to help a business be successful • Business strategy development may revolve around several different components • • • Customer intimacy Operational excellence Product leadership

Risk Management Planning Companies use controls to reduce the risk that what they planned to happen during the budgeting and planning processes will not happen.

Influence on Accounting Decisions Ethical, value-based leadership is based on a variety of factors, including loyalty and respect, a history of fair dealing and trust among others. Values-based leadership is an execution in practice of the philosophy of management. Leaders need to encourage employees to embrace the core values of the company.

Quick Review • Financial vs. Managerial Accounting • • Financial: using internal data for external purposes Managerial: using financial data for internal purposes • • • Planning Controlling Decision making • • • Customer intimacy Operational excellence Product leadership • Components of Managerial Accounting • Components of Strategy Development