Managerial Accounting:

An Overview
Chapter 1

PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
 1-2

Financial and Managerial

Accounting: Seven Key Differences
 1-3

Work of Management

Planning
Planning
Controlling
Controlling
Decision
Decision
Making
Making
 1-4

Planning

Establish
Establish Goals.
Goals.

Specify
Specify How
How Goals
Goals
Will
Will Be
Be Achieved.
Achieved.

Develop
Develop Budgets.
Budgets.
 1-5

Controlling
The
The control
control function
function gathers
gathers feedback
feedback to
to
ensure
ensure that
that plans
plans are
are being
being followed.
followed.

Feedback
Feedback inin the
the form
form ofof performance
performance reports
reports
that
that compare
compare actual
actual results
results with
with the
the budget
budget
are
are an
an essential
essential part
part of
of the
the control
control function.
function.
 1-6

Decision Making
Decision
Decision making
making involves
involves
making
making aa selection
selection among
competing alternatives.
alternatives.

What
What should
should
we
we be
be selling?
selling?
Who
Who should
should
we
we be
be serving?
serving?
How
How should
should
we
we execute?
execute?
 1-7

Accounting Majors
The IMA estimates that more than
80% of professional accountants
in the U.S. work in non-public
accounting environments.

Employers expect accounting majors

to have strong financial accounting
skills, but they also expect
application of the planning,
80% controlling, and decision making
skills that are the foundation of
managerial accounting.
 1-8

Certified Management Accountant

A
A management
management accountant
accountant
who has the necessary qualifications
qualifications
and
and who
who passes
passes aa rigorous
rigorous professional
professional
exam
exam earns
earns the
the right
right to
to be
be known
known asas aa
Certified
Certified Management
Management Accountant
Accountant
(CMA).
(CMA).
 1-9

Managerial Accounting: Beyond the

Numbers

The primary purpose Planning

Planning
of this course is to
teach measurement
skills that managers
Controlling
Controlling
use to support
planning, controlling,
and decision making
Decision
Decision
activities.
Making
Making
 1-10

Managerial Accounting: Beyond the

Numbers
Measurement What
What net
net income
income should
should my
my company
company
skills help report
report to
to its
its stockholders?
stockholders?
managers Measure
Measure and
and report
report historical
historical data
data
answer that
that complies
complies with
with applicable
applicable rules.
rules.
important How
How will
will my
my company
company serve
serve its
its customers?
customers?
questions. Measure
Measure andand analyze
analyze mostly
mostly non-
non-
financial,
financial, process-oriented
process-oriented data.
data.

Will
Will my
my company
company need
need to
to borrow
borrow money?
money?
Measure
Measure and
and analyze
analyze estimated
estimated
future
future cash
cash flows.
flows.
 1-11

Managerial Accounting: Beyond the

Numbers

Six Business Management Perspectives that

go beyond the numbers to enable intelligent
planning, control, and decision making:
•An Ethics Perspective
•A Strategic Management Perspective
•An Enterprise Risk Management Perspective
•A Corporate Social Responsibility Respective
•A Process Management Prospective
•A Leadership Perspective
 1-12

An Ethics Perspective
The Institute of Management Accountant’s (IMA)
Statement of Ethical Professional Practice provides
guidelines for ethical behavior.
Recognize
Recognize and
and communicate
communicate professional
professional
limitations
limitations that
that preclude
preclude responsible
responsible judgment.
judgment.

Maintain
Maintain Follow
Follow applicable
applicable
professional
professional Competence laws,
laws, regulations,
regulations,
competence.
competence. and
and standards.
standards.

Provide
Provide accurate,
accurate, clear,
clear, concise,
concise, and
and
timely
timely decision
decision support
support information.
information.
 1-13

A Strategic Management Perspective

A strategy
is a “game plan”
that enables a company
to attract customers
by distinguishing itself
from competitors.

The
The focal point
point of a
company’s
company’s strategy should
be its
its target
target customers.
customers.
 1-14

An Enterprise Risk Management

Perspective
Should I try to avoid the
risk, accept the risk, or
A process used reduce the risk?

by a company to
proactively identify
and manage risk.

Once
Once aa company
company identifies
identifies its
its risks,
risks, perhaps
perhaps the
the
most
most common
common riskrisk management
management tactictactic is
is to
to reduce
reduce
risks
risks by
by implementing specific
specific controls.
controls.
 1-15

A Corporate Social Responsibility

Perspective
Corporate social responsibility (CSR) is a concept
whereby organizations consider the needs
of all stakeholders when making decisions.

Environmental
Customers Employees Suppliers Communities Stockholders & Human Rights
Advocates

CSR extends beyond legal compliance

to include voluntary actions that satisfy
stakeholder expectations.
 1-16

A Process Management Perspective

A business
process is a series of
steps that are followed in order to
carry out some task in
a business.

Product Customer
R&D Design Manufacturing Marketing Distribution Service

Business functions making up the value chain

 1-17

A Leadership Perspective

Organizational leaders unite the

behavior of employees around
two common themes—pursuing
strategic goals and making
optimal decisions.

Factors that influence behavior:

•Intrinsic Motivation
•Extrinsic Incentives
•Cognitive Bias
 1-18

End of Chapter 1