introduction to management accounting

Introduction to Management
Accounting and Finance
Introduction to Managerial Accounting video
- Accounting:
o Identifies, records and summarises economic information via financial statements
(eg balance sheets)
o Reports these summaries to decision makers (managers, investors, general public)
o Shows where and where a company spends money and makes commitments
o Helps predict future effects of decisions
o Helps direct attention to inefficiencies and opportunities
- Financial accounting – Provides economic information to external decision makers
o Required to follow Generally Accepted Accounting Principles (GAAP)
o Public companies audited by an independent cpa
- Managerial accounting – provides information for internal decision makers
o Accounting systems that fit the specific needs of managers



L2 Introduction to Management Accounting and Finance
- Accounting (American accounting association) – the process of identifying, measuring and
communicating economic information to permit judgements and decisions by users of the
information
- Management accounting
o Focusses on future costs
o Does not have to follow rules and regulations
o Helps in budgeting and controlling costs
o Primary purpose is to provide information for internal decision making
- Information systems – backbone of modern companies; enables communication, sales and
marketing, supply chain management, decision making and more
o Transaction Processing systems (TPS)
 Used by operation staff
 Data will be high frequency and short term eg shops recording sales
o Management Information Systems (MIS)
 Used for structured decision making that helps managers analyse
performance and control the business
 Draw mainly on summarised internal information (eg from TPS to determine
reordering requirements)
o Executive Information Systems (EIS)
 Used by senior managers to analyse organisational performance, observe
trends and make decisions with a highly summarised picture of the business
 Uses internal and external information (eg information regarding the market
in which the company operates)
 Eg this information could support strategic expansion plans

, o Enterprise Resource Planning (ERP)
 System where many diverse business functions (HR, sales, production,
supply chain) are integrated under a singular database (eg SAP)
 Also enables modern accounting such as activity-based costing, as it will be
easier to identify cost pools and cost drivers
o Customer Relationship Management Software (CMRS)
 Can be contained as a module in ERPS
 Centralises customer communications, purchasing history, sales leads and
more into one database
 Helps a sale team become more productive, improve communication,
automation of processes, and measure sales performances
 Eg retail company may use CRMS and customer loyalty card information to
automatically email customers specific offers based on their shopping
history
- Role of information systems
o Communication, decision making, management, control, improvements
- Cost vs Benefit
o Costs/ problems – hardware/software, staff resistance and morale, time and
disruption
o Benefits – improved organisation, communication
- Big data and Data analytics considerations
o Big data – large volume of raw data (structured & unstructured) that can be
analysed
o Data analytics – raw data transformed into information that can be used for decision
making
o Ethical considerations – what happens to the data, who can access it
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- Goal congruence – alignment of actions of staff with strategy of the business on a wider
scale
- Information levels – Strategic, Tactical, Operational




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L3
- Cost object – any activity for which a separate measurement of cost is required
o Eg. Cost of making a product or providing a service)
o Need to know so we can understand costs being incurred to help make decisions