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Management accounting involves applying techniques and concepts to economic data to assist management in establishing plans and making rational decisions to achieve objectives. It provides financial information for internal managers to plan, evaluate, and control activities. Management accounting is primarily concerned with providing information to internal managers for planning, controlling operations, and decision making.

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152 views4 pages

MS Reviewer

Management accounting involves applying techniques and concepts to economic data to assist management in establishing plans and making rational decisions to achieve objectives. It provides financial information for internal managers to plan, evaluate, and control activities. Management accounting is primarily concerned with providing information to internal managers for planning, controlling operations, and decision making.

Uploaded by

angelinavalencia0307
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Management Accounting

Prelim Reviewer

 Management Accounting
 involves the application for appropriate techniques and concepts to economic
data so as to assist management in establishing plans for reasonable
economic objectives and in the making of rational decisions with a view
toward achieving these objectives.
 It is the process of identification, measurement, accumulation, analysis,
preparation, interpretation and communication of financial information,
which is used by management to plan, evaluate and control activities within
an organization.
 It also comprises the preparation of financial reports for non-management
groups such as shareholders, creditors, regulatory agencies and tax
authorities.

 OBJECTIVE:
 Management Accountants
 Concerned with providing information to managers, that is, people inside
an organization who direct and control the operations.
 Provide a variety of reports. (timely and frequent updates on key
indicators, analysis of business situation, opportunity and analytical
reports)
 Involved in the process of managing the entity.
 Making strategic, tactical and operating decisions and helping coordinate
the efforts of the entire organization.
 Assure that the organization operates as a unified whole in its short term
and long term goals.

 SCOPE:
 Management Accounting is concerned primarily with providing information to
internal managers who are charged with planning and controlling the
operations of the firm and making a variety of management decisions.
 Tasks:
 Scorekeeping or data accumulation - enables both internal and external
parties to evaluate organizational performance (income statement) and
position(balance sheet).
 Interpreting and reporting of information - helps managers to focus on
operating problems, opportunities and inefficiencies.
 Problem solving or quantification - concoct a possible courses of action
as well as recommendations as of the best procedures.
 Scope:
 PLANNING – involves setting goals for the firm, evaluating the various
ways to meet the goals.
 budget. cash budget, capital budget, projected bs. breakeven analysis,
projected is (useful tooles in profit planning).
 CONTROLLING – involves the evaluation of whether actual
performance conforms with planned goals.
 cost variance analysis, fs analysis gross profit variance analysis.
performance reports.
 DECISION MAKING – involves determination of predictive
information for making important business decision

Planning and Control Process

Financial Accounting vs Management Accounting

Financial Accounting Management Accounting


Involves the systematic recording of Concerned with providing financial
business transactions governed by a body information to persons within the
of international financial reporting organization to enable them to make
standards (IFRS) leading to preparation informed judgements and effective
of financial statements for the use of decisions which further the organizations
various interested parties. goals.
Provide data for both internal and Provide data for internal and users only
external users

Financial data should be recorded Reports need not be presented in


accordance to IFRS conformity with IFRS to be able to
present more useful data to management.
Provides summaries of past financial Strong future orientation.
transactions
All-purpose reports with historical data Special reports containing both historical
are prepared for use of different parties. and projected data are prepared to meet
the needs of specific users.
Reports are still useful even if submitted Timeliness is often more important than
late and show summaries of financial precision to managers. Prompt
consequences of actual and the past submission of the report is necessary to
activities where precision is required. preserve its usefulness and good
estimates may be enough to make good
decisions.
Concerned with reporting for the Focuses reporting on the parts or
company as a whole. segments of the company.
Mandatory. Not mandatory.
Required by law as exemplifies by the
report requirements of the BIR, SEC and
other government agencies.

Activities of Management Accountants

1. Planning
2. Reporting
3. Controlling
4. Resource Management
5. Information Systems Development
6. Technological Implementation
7. Verification
8. Administration

 Increase and Decrease formula

Current year - previous year

 Percentage formula:

Current year - previous year / previous year x 1

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