Chapter 1 Introduction to Managerial Accounting What is Managerial Accounting Managerial accounting provides information that helps managers fulfill their three primary responsibilities planning directing and controlling operations Integrated throughout all of these responsibilities is decision making Planning Setting goals and objectives Directing Overseeing day to day operations Controlling Evaluating our results and making adjustments Managerial accounting emphasizes relevant information that can be used to make business decisions that will positively impact the future operations of the company Financial Accounting vs Managerial Accounting Characteristic Financial Accounting Managerial Accounting Users of information Purpose of information Primary product Reporting format Focus basis of information Characteristic of information Reporting unit Reporting frequency Verification of information Requirement of information Impact on employee behavior EXTERNAL INTERNAL Investing decision Planning directing controlling Preparing Financial Statements Variety of reports GAAP Historical Reliable objective Company as a whole Annually quarterly Audited by CPAs SEC Adequate disclosure Whatever we want Future Relevant Segments As needed No formal audit Not required Concern for behavioral implications The Importance of Ethical Behavior Ethical behavior means doing the right thing regardless of the consequences Not all unethical behavior is illegal but all illegal behavior is unethical 1 Unethical behavior includes Dishonesty Unfairness Lack of objectivity Irresponsibility Sustainability and Managerial Accounting Sustainability as defined by the United Nations is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs The Three Pillars of Sustainability S O C I A L E N V I R O N M E N T E C O N O M I C S The triple bottom line recognizes that a company s performance should be viewed in terms of the following three items 1 PROFIT economic 2 PEOPLE social 3 PLANET environmental Regulatory Issues and Other Trends SOX IFRS XBRL IR JIT TQM 2
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