Chapter 1: Introduction to Managerial Accounting
The Meaning of Managerial Accounting
Managerial Accounting is the provision of accounting information for a company’s internal users.
The objectives of managerial accounting are:
→ Planning
→ Controlling
→ Decision-making
1. Planning
• Planning requires setting objectives and identifying methods to achieve those objectives.
• For example, the objective can be to improve product quality, therefore, implement
more product scanning systems.
2. Controlling
• The managerial activity of monitoring plan’s implementation and taking corrective
action as needed.
• Controlling occurs by comparing actual performance to expected performance
3. Decision-making
• The process of choosing competing alternatives is decision making.
• Planning and control interwind with one another.
Financial Accounting and Managerial Accounting
Financial Accounting
• Financial Accounting is primarily concerned with producing information (financial
statements) for external users. (Investors, creditors, customers, suppliers).
• Has a historical orientation and can be used for investment decisions, stewardship
evaluation, monitoring activity and regulatory measures?
• Financial statements must follow rules defined by:
o Securities and Exchange Commission (SEC)
o Financial Accounting Standards Board (FASB)
o International Accounting Standards Board (IASB)
Managerial Accounting
• Managerial Accounting system procedures information for internal users (managers,
executives and workers)
• Called internal accounting
• identifies, collects, measures, classifies, and reports financial and nonfinancial information to
internal users in planning, controlling, and decision making.
The Meaning of Managerial Accounting
Managerial Accounting is the provision of accounting information for a company’s internal users.
The objectives of managerial accounting are:
→ Planning
→ Controlling
→ Decision-making
1. Planning
• Planning requires setting objectives and identifying methods to achieve those objectives.
• For example, the objective can be to improve product quality, therefore, implement
more product scanning systems.
2. Controlling
• The managerial activity of monitoring plan’s implementation and taking corrective
action as needed.
• Controlling occurs by comparing actual performance to expected performance
3. Decision-making
• The process of choosing competing alternatives is decision making.
• Planning and control interwind with one another.
Financial Accounting and Managerial Accounting
Financial Accounting
• Financial Accounting is primarily concerned with producing information (financial
statements) for external users. (Investors, creditors, customers, suppliers).
• Has a historical orientation and can be used for investment decisions, stewardship
evaluation, monitoring activity and regulatory measures?
• Financial statements must follow rules defined by:
o Securities and Exchange Commission (SEC)
o Financial Accounting Standards Board (FASB)
o International Accounting Standards Board (IASB)
Managerial Accounting
• Managerial Accounting system procedures information for internal users (managers,
executives and workers)
• Called internal accounting
• identifies, collects, measures, classifies, and reports financial and nonfinancial information to
internal users in planning, controlling, and decision making.
