Disscussing Managerial Accounting

Discussing Managerial Accounting

Stacy L. Free

BUS630: Managerial Accounting (NAH1448A)

Instructor:  Brian Shaw

January 15, 2015

Discussing Managerial Accounting

The word accounting brings to mind money management and usually has a financial undertone. However, in the business world, accounting has two different aspects, financial accounting, and managerial accounting. Financial accounting is treating money as a means of measuring economic performance instead of as a factor of production. Managerial accounting, on the other hand, is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. The true-life blood of any company is the daily management of business activities: Buying supplies, equipment, selling merchandise, manufacturing goods or providing services, as well as, hiring employees, and paying salaries and benefits. Keeping this thought in mind, the purpose of this paper is to examine the managerial aspect of business accounting.

In 1981, The Institute of Management Accounts (IMA, known then as The National Association of Accountants) issued their first Statement on Management Accounting titled Definition of Management Accounting. It defined management accounting as:

“…the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control an organization and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies, and tax authorities.”

At that time in history, this was the most accurate and proper way to give meaning to this diverse profession, however technology and evolution have made it necessary to adjust that definition. According to IMA:

“managerial accountants have moved...