Click Here http://www.eacademy4u.com/ Online Educational Website For You

1. INTRODUCTION TO MANAGERIAL
ACCOUNTING
1

2. MANAGERS EMPLOYEES
USERS
GOVERNMENT
SHAREHOLDERS /
POTENTIAL
INVESTORS
CREDITORS /
PROVIDERS
LOAN
2

3. DEFINITION
• MA is concerned with the provision of information to
people within the organization to help them make
better decisions
• FA is concerned with the provision of information to
external parties outside the organizaation
3

4. 1)Cost accounting is the process of
determining and accumulating the cost of
product or activity whereas
2)Management Accounting provides
information to internal users in
organisation to make better decision and
improve efficiency and effectiveness of
existing operation. This concerns
forecasting and monitoring business
activities, reporting to both internal
(employees) and external parties
(shareholders
4

5. Objectives of management and cost
accounting
1)to allocate costs between cost of goods
sold and inventories for internal and
external profit reporting
2)provide relevant information such as selling
price, cost analysis to help managers to
make better decisions
3)provide information for planning,
controlling of the cost and performance
measurement.
5

6. MANAGEMENT ACCOUNTING
Management accounting is concerned with the provision and
interpretation of information required by management of all
levels for the following purposes:
*Formulating the policies of the organization
*Planning the activities of the organization in the long,
medium and short term i.e . strategic through to
operational planning
*Controlling the activities of the organization
*Decision making that is the process of choosing
between alternatives
*Performance appraisal at strategic, departmental and
operational levels
6

7. 7

8. OBJECTIVES OF COSTING
8

9. DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND COST
AND MANAGEMENT ACCOUNTING
DIFFERENCES FINANCIAL ACCOUNTING COST AND MANAGEMENT
ACCOUNTING
Users orientations External users- shareholders, Internal users- management
creditors, customer, wide users
for decision making purpose
Legal /rules Drafted accounting GAAP – Drafted according to
General Accepted management suitability
Accounting Procedure
Time frame Historical data – report on the Futuristic – future events that
past event are planned to happen
Report frequency Well defined – annually , Whenever needed- daily,
semi- annually weekly, monthly
Segment reporting Describe whole organization Only covered part of
organization (dept ) –
production department
Degree of precision Objectivity in principle , easy to More subjective – can be
9
understand

10. SIMILARITIES BETWEEN FINANCIAL ACCOUNTING AND COST
AND MANAGEMENT ACCOUNTING
FEATURES FUNCTION
Record –keeping Concerned with selecting, measuring
and accumulating of data concerning
business transactions
Performance evaluation Assess performance and find any
variance between actual and planned
performance for further action to be
taken
Decision making Involves in choosing the best between
alternatives
Principles of stewardship Carry the responsible to appropriately
record and report performance
Accounting system Procedures and guidelines 10 are

11. CHARACTERISTICS
1) RELEVANCE
2) ACCURACY
3) TIMELINESS
4) COST EFFECTIVENESS
5) UNDERSTANDABILITY
11

12. FUNCTION OF MANAGEMENT
12

13. Roles of management
accountant in the managerial
process
1)The management accountant assists in the
setting up of information system relating
to cost accounting matters. This system is a
value added to the managers. For example,
for production manager, by using the card
of standard cost he may highlight
information such as breakdown of the
production elements of a particular
product to be produced.
13

14. 2)The management accountant advises and
monitors the system so that it runs smoothly
as expected and that information are
updated regularly.
3)The management accountant interprets
the figures reported and explains how the
data and information can be made useful. He
also makes recommendations for alternative
courses of actions in a decision making
process.
4)The management will use his expertise to
analyse raw data and present them in a
more useful format to the management 14

15. Roles of management accountants in
the 21st century:
1) Focus not only on financial information but also
non-financial information such as quality of goods
and services and customer satisfaction
2)Use of external information such as information
on the external environment and competitors to
maintain competitive advantage
3)More forward looking rather than looking into the
past e.g. proposal on “looking beyond budgeting”
4)Changes in the environment are becoming the
norm, therefore management accountants need to
adopt to changes through the application of relevant
management accounting approaches e.g. ABC,
target costing 15