Master of Business

Administration

MBA

Accounting (1)
Dr. Ashraf Ibrahim

Eslsca 45C
( March 2014 )

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 1

 I. Why Accounting is important for
Managers?

 To use fi nancial infos to support decision

making.
 Financial Statement is the output of the
company.
 To study the fi nancial Statement to analyze
the fi nancial status of the company
 But the accounting is measuring
something:

The Accounting Cycle

Financial
Document Statements
s
RecordingJournal

Ledge
r

Trial
Balances
II. The difference between Financial
Manager & the Accounting
Manager?
 The finance Manager is the one who takes
your income and search for investment

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 2

  But accounting Manager is the one dealing
with Books, he is like a recorder, and will
not take decision from your part (instead
of you)
 the accountant should follow accounting
principles & Accounting Standards.
 Any Transaction should be documented.
III. Users of the Financial
Statements?
 Mangers to evaluate the company
situation.
 Shareholders
 Stakeholders
 Employee (for profi t)
 Investor Caring fi rst in a fi nancial
statement about:
o Profi t
o Liquidity
o Assets Management
 Creditor Caring fi rst in a fi nancial
statement about:
o Liabilities (Debt) fi nancialRisk
o Liquidity
Management Accounting is mainly
serve the Management (Internal) to
make decisions either day to day
operating or long-range strategic

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 3

Financial Accounting
Mainly for
External (Shareholders, investors, taxes,
..... )

The Manager accounting USE THE

Accounting Information system
for:
1.Decision Making:
1. Scorekeeping (Balanced scored
sheet): Evaluate org. performance
2. Attention directing: Compare
actual results to expected
3. Problem solving: Asses possible
courses of action
2.Cost-Benefit and behavioral
consideration:
Cost benefit analysis: Weigh estimated
costs against probable benefits.
Behavioral implications: the system
must provide accurate, timely budgets

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 4

 and performance reports in a form
useful for the manager

3.Planning & Control

Planning for the future → Budgeting)
Planning: setting objectives
Control: compare the implementing plans
meet the objectives
4.Budget & Performance Reports
Budget: quantitative expression of a
plan of action.
Performance Reports: Compare actual
results with budgeted amounts and
highlight variances
Variances: Deviation s for plans
U → Unfavorable
F → Favorable
I must analyze both

Product Life Cycle

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 5

PS: for more explanation :
http://www.notesdesk.com/notes/marketing/produ
ct-life-cycle-plc/
At the introduction phase 50% of the product
value determined
Value Chain Framework ( ‫)نمزذج سلسلة القيمه‬
the value chain framework of Micheal Porter
(from Traditional cost system to modern cost
system

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 6

Transform all company’s operations to
activities
By analyzing all my activities in the system
and decreasing the non-value added items, I
can decrease cost and decrease operating
cycle and added vale to customer and be more
competitive.

It is used for different fields marketing,

management, cost analysis

It also used to develop the balanced scored

card, (for managers as the balanced scored in
the airplanes)

In Cost analysis, it can be helpful to

determine the overhead and depreciation.
Ex: use of oven for different product, in
porter system we translate it to activities and
how each product benefit from these
activities, so I can determine the overhead
more easily.
Ex2: Bus company, Finance department says
he losses
Cost department says he gains

Accounting ( D .Ashraf Ibrahim) (Lec.01) Page 7

Because the cost isn’t determined by value
chain based o activities, so the price was
determined wrong. So his prices were not
competitive so he lost.
PS: for more explanation:
http://strategy-models.blogspot.com/2011/06/use-
of-porters-1985-value-chain.html
B. M. W. (Basic Minimum Wage Rate)
---------------
Global Corporation (MNC) Multinational
Corporation
Ex: Mcdonald's
Transnational
---------------
Global Business
Gives you an index on the purchase power.
Test bank (T or F):
Cost behavior pertains to how cost affect
activities of the organization (f) Activities
determine the behavior, not vice versa
A key factor in controlling cost is associating
cost with activities (T)

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