CHAPTER 1
CHAPTER 1The Accountants Role in the Organization 2009 Pearson
Prentice Hall. All rights reserved.
1Accounting Discipline OverviewManagerial Accounting measures,
analyzes and reports financial and nonfinancial information to help
managers make decisions to fulfill organizational goals. Managerial
accounting need not be GAAP compliant.
Financial Accounting focus on reporting to external users
including investors, creditors, and governmental agencies.
Financial statements must be based on GAAP.
2009 Pearson Prentice Hall. All rights reserved.2Major
Differences Between Financial & Managerial AccountingManagerial
AccountingFinancial AccountingPurposeDecision makingCommunicate
financial position to outsidersPrimary UsersInternal
managersExternal
usersFocus/EmphasisFuture-orientedPast-orientedRulesDo not have to
follow GAAP; cost vs. benefitGAAP compliant; CPA auditedTime
SpanUltra current to very long time horizonsHistorical monthly,
quarterly reportsBehavioral IssuesDesigned to influence employee
behaviorIndirect effects on employee behavior 2009 Pearson Prentice
Hall. All rights reserved.3Strategy & Management
AccountingStrategy specifies how an organization matches its own
capabilities with the opportunities in the marketplace to
accomplish its objectivesStrategic Cost Management focuses
specifically on the cost dimension within a firms overall strategy
2009 Pearson Prentice Hall. All rights reserved.4Strategy &
Management AccountingManagement accounting helps answer important
questions such as:Who are our most important customers, and how do
we deliver value to them?What substitute products exist in the
marketplace, and how do they differ from our own?What is our
critical capability?Will we have enough cash to support our
strategy or will we need to seek additional sources? 2009 Pearson
Prentice Hall. All rights reserved.5Management Accounting and
ValueCreating value is an important part of planning and
implementing strategyValue is the usefulness a customer gains from
a companys product or service 2009 Pearson Prentice Hall. All
rights reserved.6Management Accounting and ValueValue Chain is the
sequence of business functions in which customer usefulness is
added to products or servicesThe Value-Chain consists of:Research
& DevelopmentDesignProductionMarketingDistributionCustomer
Service 2009 Pearson Prentice Hall. All rights reserved.7The Value
Chain Illustrated
2009 Pearson Prentice Hall. All rights reserved.8A Value Chain
Implementation
2009 Pearson Prentice Hall. All rights reserved.9Key Success
FactorsThe dimensions of performance that customers expect, and
that are key to the success of a company include:Cost and
efficiencyQualityTimeInnovation 2009 Pearson Prentice Hall. All
rights reserved.10Planning & Control SystemsPlanning selects
goals, predicts results, decides how to attain goals, and
communicates this to the organizationBudget the most important
planning toolControl takes actions that implement the planning
decision, decides how to evaluate performance, and provides
feedback to the organization 2009 Pearson Prentice Hall. All rights
reserved.11A Five-Step Decision Making Process in Planning &
ControlIdentify the problem and uncertaintiesObtain informationMake
predictions about the futureMake decisions by choosing between
alternativesImplement the decision, evaluate performance, and learn
2009 Pearson Prentice Hall. All rights reserved.12Management
Accounting GuidelinesCost Benefit approach is commonly used:
benefits generally must exceed costs as a basic decision
ruleBehavioral & Technical Considerations people are involved
in decisions, not just dollars and centsDifferent definitions of
cost may be used for different applications 2009 Pearson Prentice
Hall. All rights reserved.13A Typical Organizational Structure and
the Management Accountant
2009 Pearson Prentice Hall. All rights reserved.14Professional
EthicsThe four standards of ethical conduct for management
accountants as advanced by the Institute of Management
Accountants:CompetenceConfidentialityIntegrityObjectivity 2009
Pearson Prentice Hall. All rights reserved.15
2009 Pearson Prentice Hall. All rights reserved.
