MANAGEMENT ACCOUNTING

 Basic intention of creating business is to generate income

 and to generate income there are many ways to do so,
 it helps if you have the tools under managerial accounting
Managerial Accounting
- Primary goal of accounting is to provide useful information for decision-makers
o Government, stakeholders, customers, etc.
o They all have different ideas on how to use the financial statements
o Accounting is the language of business, through this financial statement the
business will speak
- Managerial accounting intended users: internal stakeholders.
o Management, plant supervisors, branch managers
o Why is it useful? Ex. plant managers know that during a certain season the
volume of orders will go u at a certain percentage so they can project the
possible volume of orders
 Although this may not be accurate, there is at least supporting data from
previous years to support the statement – financial statements
o Managerial accounting is limited to internal stakeholders – those on the inside of
the company.
Functions of Management
 Planning
- setting short term and long-term goal
- at the beginning of the taxable year there will be a meeting for the top
management to plan, set goals, talk about what needs change or improvement.
- Talk about what goals needs to be achieved in short term and long term
 Directing
- implementing the plan
- using a certain approach, this is what is to be done to be implemented properly
in order to achieved the goals set
 Controlling
- monitoring actual results
- you will try to monitor the situation, is the goal achieved?
- What are the challenges for these few months?
- Where are we in achieving the goals?
- And was the implementation according to the plan?
- Check the costs as well
Managerial accounting Vs. Financial Accounting
Financial Accounting
Types of reports
Financial statements prepared according to
GAAP
Financial statements prepared must follow
GAAP otherwise by the time of audit, there
will be a lot of findings
Managerial accounting
Reports prepared without following GAAP
When it comes to managerial accounting
there is no GAAP
The intention is to provide necessary
information and take note for proper control
of implementation stage of plan

As long as your information is based on

available data and it was accurate and
correct
Nature of information
Objective and historical Subjective and future oriented
Objective because there is really a way to This is subjective because you have to
prepare the financial statements it has to be determine what is your intention in preparing
GAAP oriented so you can relay the this report? Is it to determine the possible
information to the stakeholders loss? The possible income if you will take the
particular proposal?
You must journalize, record the transaction,
record this amount —historical aspect It is future oriented because what you are
looking at is what will happen is you accept
Ex. you bought a car 2 years ago worth 2 the proposal, in the future is it aligned to the
million, after 2 years it is still 2 million in the goal? Will we earn money with that?
recording but now you have to check the
depreciation regarding that asset FS backs up the information or statement
from managerial accounting.

Future oriented using the information in FS

Frequency of reporting
Prepared periodically (monthly, quarterly, Prepared as needed
annually)
Financial statements have monthly, There is no set deadlines unless the
quarterly, annually because there are entities management set it, it is as needed
that need it,
Ex. BIR, tax returns – depends on the entity If the plant managers says you need to make
one every day, then you have to do it
And you can always predict with accuracy
when to submit this because there are That is one of the challenges in managerial
deadlines accounting
 Level of detail
Information reported for the company as a Information reported at the decision making
whole level (such as by product, region, customer)
Financial statements needs to be detailed, The level of detail depends on the
the entire business management

Covers the information regarding the
business as a whole
Ex. in one company they produce different
products, it is possible that only one manager
has a problem – product A is problematic so
now they will focus on the product to see
what is wrong

Or it could be by region – why in this branch

despite the people we are losing? Could it be
the costs? Lets focus here to see

The level of detail is as needed, not as

detailed as financial accounting

Types of Organization
 Manufacturing companies
- Those who manufacture goods
- There is cost involved which is why there is a need to involve the principles of
management accounting
 Merchandising companies
- Buy and sell. You have options – “kikita ba tayo dyan”
 Service companies
- There is also expenses in this