M1 Introduction to management accounting

ON COMPLETION OF THIS CHAPTER YOU SHOULD BE ABLE TO: describe the basic aims of management accounting identify the users of management accounting information distinguish management accounting from financial accounting understand how management accounting can assist in the attainment of an organisations strategic goals identify different organisational settings and describe the role of cost information plays in each setting define basic cost concepts classify costs by function prepare an absorption-costing income statement and explain how financial statements differ among manufacturing, service, and merchandising organisations

M1.1 Chapter Overview

In this chapter we define a management accounting system, outline the role it plays within an organisation and describe how management accounting differs from financial accounting. Particular emphasis is placed on how management accounting can assist in the attainment of an organisations strategic objectives. The chapter presents several basic cost concepts, the way they are classified and role of cost information plays in the management of organisations.

M1.2 What is Management Accounting?

Accounting is widely acknowledged as a process of identifying, measuring and communicating economic information to allow informed decisions by the users of that information. More specifically the terms, management accounting and management accounting system, relate to the provision of information specifically for the internal decision-makers within an organisation. In this chapter we will expand on these basic descriptions. Management accounting includes a broad spectrum of activities and can be described as the procedures, practices and methods that are employed by an organisations management to ensure the effective use of its resources. To guarantee the optimum deployment of resources a management accounting system relies on all aspects of the broader accounting system to collect and distribute the best available data to a hierarchy of managers within an organisation so as to assist in their collective objective to increase stakeholder value.
MANAGEMENT ACCOUNTING SUPPLEMENT CENGAGE LEARNING AUSTRALIA 2014