Managerial Accounting

402 Pages·2003·39.502 MB·English

by  Pierre L. Titard

Managerial
Accounting
THOrvlSoN
C(JSTOIVI PTJBLISHTNG
Pie e L. Titad, Ph.D., CPA
2004,ThomsonLearnnq
2003,pp1324,tthDrDeanDGreqoro

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ns and how it relates to financial accounting' The
iiformatiqn and rvhy minagerial accountlng ls
nizations.
Accousuxc
,>'lrir,Ni{rl-
RF OF }L\NAGEtu'1'L
calle ng' communic
often
make the firrn The
t can
is used Pri oses; it maY o
)ourse-
[yp"s o{ Decisions
to*n
or to buy it from an outside
t to m"a"k e an item is often diff rcult' It
ata.
iuoe of decision' The expansion may be related to a
;#-;;; ;.;s a firm go about mrking this.tvpe or
nug.taf accounting provides management wlth oata
must be made rcgTeg ttre tirnfug of equipment reptarermnt, re nmH.as rhe type of new equiprnent to be
bought. The use of wnagerial xeounting provides informatioo for rhisdacision-making taik.^
Gre of a rnanagtt'smostiE{fifiantjobsis that of evaluating sr$odirm managers. This type of decision
omotions. The use of interml information assists in the
ce. Thus, it is virally importarit ement maie p."pr rrr"f
iI ri-lp u:" ;ni''l r: .li,fi _-.'i. t I jl aS:. i.. .: ;! -\,c c c ir.e.ii:t g
It is important toreahze thatinti:mal accounting information des ns make decisions for management
but merely provides a basis
for accountants. In cach ex
do this in a reasonabh, rati
As a potential fuure rnanagil, Iur need to un
he faced with exactly- rbe sarne typs of decisions
illustrate the concepa Eessaryfumaking variou
conciprs
These appEaOitiry that you
silrratisns \Yhi.t face-
financial i
ent, the ba
of chsh fl
statemen6 may varys&newhat from one firm to another but theyhalrthr same relative format. A financial
aceoun[Dg course ftr]rcs detaih for accumulating informalion and rcporting it through these four formal
financial statements
pr-i nMcaipnley s, in confonni ally accepted accounting
financial st Ap provide nst which outside users of
Securities and Exch*p Conraission, (SEC), as wedlli ffaesr e-n.c"eys a.rrehoergr- nfirrmr' s,. mFiurmst sh arevgei stthereeidr hwniathnc tihael
pstraelseemnetanttiso na ui dited hy certihed public accountants. CPAs repfrt oft tle fairness of financial statement
Owners 2 51 lyfi ramcc aerpete idn tearcecsotuendt iinng aprdri nn€ipqll€s ofte-n use the infonnation reported
in formal financial statemenrs- llowever, the primary p atements is to communicate to
individuals:rndinticsredparriesoutside thefirm. With th ation, outside parties rnake.such
decisions as to whetr*to erterdcredit to the firm and whether to fuwsf in the hrm by buying stock or to
are variols f,rrrm. ro decide which firm appears to be a
le in tbe groxth of our economic system. The
anagerial* is irnccsrate, because there is no conflict
icates informatiqr fordecision-making. The decision-
roprovide inromratioarorborhcsrrnunicarionneeds il:I#"HffiTlT,".,I:ffj*"#ff::::",frf
1,.,...rr*o. Both rn;.r;- drurv data from the samc sotrrces. with this in rnind' [ct us exuntittc some of the
l.lcrcnccs nntl sinrilarities bctwcsn thc two typcs offlccounting. reuliz-ing that peculiaritic's ofc'llch are basc'd
t the informlttion ncL'ds of thc usr:rs'
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| .,",,",.1i;i .\-.cui,',.,,.\'.',1,t,'ri-i ll; l)r'ir." ii'i' ' 1i;'t''"'i ' 4t externrl
irancialstatenrentsofpubliclyreportec!compcnieslrreprepirredinconfaccePted
and difterenc.s of sPecirlc
ovide enough stlndardization in external reporting
a Frrm brsed on its financial statements'
cision-making. Managers can use a variety o[
ons. The information and format for reporting
desires of management. The use of generally
rial accounting' Management can develop and
ncerned with the presentation of exteinal financial
:atements. Nlany CPA firms do provi ting s
.r.iof in,.*"r hnancial information PA is
r deteimine their fai rness of presentat epted
)ilnrgerial irccounting cloes not normally fall under the scrutiny of the CPA'
i-- -.,,,!r.;,
Finon.ialaccountingterminologyisretltivelystandardized.Someprinciples,concepts'
n,nda lnlncaianl cpiaols istitoante.m" eNnetsv emrthryll ebses ,k nthoe*rne bii- y am faorir" dtheagnre oen oe ft esrtman, diarrrcdhiz aasti o"bna; laanncde' insh meeat"n ya ncda s'essta' tpermefeenrtr eodf
:rmSinionlcoeg Ym eaxnisatgse.rial uccounting does not have a fornurl rule-making body' its terminology is less
tandardized. As a result, you sometitnes wilt find managerial uccounting terms uscd differently in different
ituations.
accounting. from a practical standpoint- the economic
counting than on financia[ accounting-
tements are based on historical cost and reflect what
ents look at the information with an idea of predicting
Tlan
man
lhat
accounting. Firms nectl to make decisions about the
precise than historical facts.