Chapter 1: Introduction to Managerial Accounting

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Managerial Accounting: Provision of accounting information for a company's internal users. Firm's internal accounting system designed to support the information needs of managers. Not bound by any formal criteria.

Three Objectives:

1. Provide information for planning the organization's actions

2. Provide information for controlling the organization's actions

3. Provide information for making effective decisions

Planning: Detailed formulation of action to achieve a particular end.

Controlling: Monitoring a plan's implementation and taking corrective action as needed.

- Usually achieved by comparing actual performance with expected performance

Decision Making: Process of choosing among competing alternatives.

Value Chain: Set of activities required to design, develop, produce, market, and deliver products and services, as well as provide support services to customers.

Continuous Improvement: Continual search for ways to increase the overall efficiency and productivity of activities by reducing waste, increasing quality, and managing costs.

Total Quality Management: Management philosophy in which manufacturers strive to create an environment that will enable workers to manufacture perfect (zero-defect) products.

Lean Accounting: An accounting practice that organizes costs according to the value chain by focusing primarily on the elimination of waste.

Objective:

- Provide information to managers that support the effort

- Provide financial statements that better reflect overall performance, using financial and non financial information

Guidelines for ethical behavior:

1. Competence: Maintain professional competence. Follow applicable laws, regulations, and standards. Provide accurate, clear, concise, and

timely decision support information. Recognize and communicate professional limitations that preclude responsible judgement.

2. Confidentiality: Do not disclose confidential information unless legally obligated to. Ensure that subordinates do not disclose confidential

information. Do not use confidential information for unethical or illegal advantage.

3. Integrity: Mitigate conflicts of interest and advise others of potential conflicts. Refrain from conduct that would prejudice carrying out duties

ethically. Abstain from activities that might discredit the profession.

4. Credibility: Communicate information fairly and objectively. Disclose all relevant information that could influence a user's understanding of

reports and recommendations. Disclose delays or deficiencies in information timeliness, processing, or internal controls.

Corporate Social Responsibility (CSR): Concept whereby organizations consider the needs of all stakeholders when making decisions. CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations.