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Date Submitted: 03/08/2014 12:02 AM
CHAPTER 1: THE ACCOUNTANT'S ROLE IN THE ORGANIZATION
MAJOR PURPOSE OF ACCOUNTING SYSTEMS
➢ Take economic events and transactions and present the information to help decision makers
➢ Note that different users (managers) will require different information
TERMINOLOGY
➢ MANAGEMENT ACCOUNTING
• focuses on internal reporting, both financial and non financial, not so constrained by GAAP, forward looking
• assists in communicating, implementing strategies, coordinating product design, production and marketing
➢ FINANCIAL ACCOUNTING
• focuses on external reporting
• records business transactions and provides (historical) financial statements according to GAAP
➢ COST ACCOUNTING
• provides info related to purchase and use of resources for both financial and management accounting
➢ COST MANAGEMENT
• active use of accounting info to plan and control costs, while maintaining customer satisfaction
• an important component of cost management is to recognize that prior decisions commit the organization to future costs
MODERN MANAGEMENT ACCOUNTING
➢ The primary users/customers of management accounting information are the organization's managers
➢ The management accountant's success is a function of whether the accounting information s/he provides improves a manager's decision(s)
STRATEGIC DECISIONS AND THE MANAGEMENT ACCOUNTANT
DEVELOPING STRATEGY
➢ How, as an organization, do we compete in our industry? What are our strengths and weaknesses?
➢ How do we match our strengths with the opportunities in the marketplace?
➢ How do we differentiate ourselves from our competitors?
• focus on low prices? e.g. Superstore, Walmart
• unique products/services with higher prices? e.g. luxury cars
➢ Management accountants assist managers in their decisions by answering such questions as:
• who are our most important customers?
• how...