Accounting Notes for Chapter 1

Study Notes for Chapter 1 – Managerial Accounting Concepts &
Principles

1. Definition & Purpose of Managerial Accounting

 Main Idea: Managerial accounting provides information to help
businesses make informed decisions.

 Definition: The process of developing information and management
tools to achieve an organization's objectives.

 Goal: Use accounting information to run the business efficiently
and make good decisions.

2. Financial vs. Managerial Accounting

Feature Financial Accounting Managerial Accounting

External (investors, creditors, Internal (department heads,
User
regulators) CFO, owner)

Regulation Regulated by GAAP Not regulated by GAAP

Reporting past financial Making future-oriented
Focus
performance decisions

Information Multiple sources, often
Historical financial data
Sources innovative

 This course focuses on Managerial Accounting from a
Manufacturer’s perspective.

3. Management Process – Using Accounting Information

4 basic phases:

1. Planning – Setting company goals

o Strategic Planning: Medium to long-term goals

o Operational Planning: Short-term goals (2 years or less)

2. Measurement – Tracking performance

o Key performance metrics:

 Market share (%)

 Customer satisfaction