1 What is managerial accounting Ch 1 Managerial Accounting An Overview Financial accounting concerned with reporting financial information to external parties such as stockholders creditors and regulators emphasizes the financial consequences of past activities objectivity and verifiability precision and companywide performance Managerial accounting concerned with providing information to managers for use within the organization emphasizes decisions affecting the future relevance timeliness and segment performance cid 0 segment part or activity of an organization about which managers would like cost revenue or profit data product lines customer groups geographic territories divisions plants and departments 3 vital activities Planning establishing goals and specifying how to achieve them cid 0 Usually accompanied by budget Controlling gathering feedback to ensure that the plan is being properly executed or modified as circumstances change cid 0 Involves gathering evaluating and responding to feedback to ensure that this year s recruiting process meets expectations Then evaluate the feedback in search of ways to run a more effective campaign next year Performance report compares budgeted data to actual data in an effort to identify and learn from excellent performance and to identify and eliminate sources of unsatisfactory performance cid 0 cid 0 Decision making selecting a course of action from competing alternatives cid 0 What should we be selling Who should we be serving How should we execute 2 Why does managerial accounting matter to your career CMA exam focuses on the planning controlling and decision making skills that are critically important to nonpublic accounting employers What skills do managers need to succeed 3 Strategic management skills Successful mangers understand that the plans they set forth the variables they seek to control and the decisions they make are all influenced by the company s strategy cid 0 Strategy a game plan that enables a company to attract customers by distinguishing itself from competitors Customer value propositions are the essence of strategy cid 0 Customer intimacy strategy You should choose us because we can customize our products and services to meet your individual needs better than our competitors You should choose us because we deliver products and services faster more conveniently and at a lower price than our competitors cid 0 Operational excellence strategy cid 0 Product leadership strategy Enterprise risk management skills You should choose us because we offer higher quality products than our competitors As a future manager you need to understand that every business strategy plan and decision involves risks Enterprise risk management used identify risks and develop responses to them that enable it to be reasonably assured of meeting its goals Risks can relate to the weather computer hackers complying with the law employee theft or products harming customers If the risks are not managed effectively they can threaten a company s ability to meet its goals Once a company identifies its risks it can respond to them in various ways such as accepting avoiding or reducing the risk most common risk management tactic is to reduce risks by implementing specific controls Process management skills managers need to continually improve the business processes that serve customers cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 business process series of steps that are followed in order to carry out some task in a business value chain consists of the major business functions that add value to a company s products and services research and development product design manufacturing marketing distribution customer service often used to describe how an organization s functional departments interact with one another to form business processes Lean production approach that organizes resources such as people and machines around the flow of business processes and that only produces units in response to customer orders often called just in time production or JIT because products are only manufactured in response to customer orders and they are completed just in time to be shipped to customers Because lean thinking only allows production in response to customer orders the number of units produced tends to equal the number of units sold thereby resulting in minimal inventory The lean approach also results in fewer defects less wasted effort and quicker customer response times than traditional production methods Because lean thinking only allows production in response to customer orders the number of units produced tends to equal the number of units sold thereby resulting in minimal inventory The lean approach also results in fewer defects less wasted effort and quicker customer response times than traditional production methods Theory of constraint TOC based on the insight that effectively managing the constraint is a key to success The constraint or bottleneck in the system is determined by the step that has the smallest capacity focusing your effort on the weakest link will bring the biggest benefit Measurement skills you need to complement your understanding of strategy risks and business processes with data driven analysis If you cannot use measurement skills to provide competent data driven answers to challenging questions then you ll struggle to persuade others to endorse your point of view Leadership skills organizations are managed by people not data and spreadsheets 6 skills be technically competent within your area of expertise and knowledgeable of your company s operations outside your functional area of expertise be a person of high integrity understand how to effectively implement organizational change strong communication skills be capable of motivating and mentoring other individuals effectively manage team based decision processes cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 cid 0 4 The Importance of Ethics in Business Corporate Social Responsibility 5 The Institute of Management Accountants IMA of the United States has adopted an ethical code called the Statement of Ethical Professional Practice That included 4 main ethical practices Competence confidentiality integrity and credibility Companies are responsible for producing financial results that satisfy stockholders they also have a corporate social responsibility to serve other stakeholders such as customers employees suppliers communities and environmental and human rights advocates whose
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