MANAGERIAL ACCOUNTING

ACT102 BY01
Handout #1
Management Accounting
-

also called as Managerial Accounting or Internal Accounting

a field of accounting that provides economic and financial
information for internal users, particularly the managers or decision
makers in an organization.

Management Functions and the Need for Managerial Accounting

Information
1. Planning
- Setting of immediate, as well as long range goals for the corporation
- Predicting future conditions that are expected to prevail
- Considering the different means or strategies by which the goals set
may be achieved
- Deciding which of the strategies should be used to attain such
goals.
2. Directing and Motivating
- Involves overseeing the day to day activities, seeing to it that the
organization is functioning smoothly and the members of the
organization are mobilized to carry out plans.
3. Controlling
- Involves checking the performance of activities against the plan or
standards set and deciding what corrective actions to take should
there be any deviation between the actual and planned/standard
performance.
Activities Involved in Managerial Accounting
1. Determining, accumulating, and explaining costs, both manufacturing
and non-manufacturing costs.
2. Computing or determining product cost/service cost
3. Determining cost behavior
4. Providing assistance to management in profit planning/budgeting
5. Accumulating and presenting data which may be used by managers in
decision making
6. Providing bases for cost control with the use of standard costs and
other planned objectives

7. Assisting managers in developing the companys prices both for

external and internal transactions.
Managerial Accounting VS Financial Accounting
Management
Accounting

Financial Accounting

Users of report

Internal users, officers

and managers

External Users, stockholders,

creditors concerned
government agencies

Purpose

To provide internal users

with information that
may be used by
managers

To provide external users with

information about the
organization's financial
position and financial
performance

Types of
Reports

Different types of
Primarily financial statements
reports such as budgets,
and the accompanying notes
financial projections,
to such statements
cost analyses

Standards of
Presentation

the management can

set rules to produce
information most
relevant to their needs

Period Covered
Types of Data

Any time period, year,

month, quarter,
week,day, etc.
Detailed segments
reports are prepared

Reports are prepared in

accordance with Generally
Accepted Accounting
Principles
Year, quarter, or month
Summarized data for the
whole organization