Mgt Accounting

Chapter 1

Introduction to Managerial Accounting

Regardless of your major or intended career path, most of you will become managers one day. A

manager has responsibility and control of selected parts of a company’s operations, or in some cases,

multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company,

prefer never to get promoted, or never accept any responsibility for some aspect of a business, will

miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given

that you have taken the initiative to attend college. Understanding managerial accounting will help you

move up the ladder more quickly, regardless of your chosen career path.

How Can Managerial Accounting Help You?

In any responsible business capacity, your boss and all other management levels above you will want

to know how well you handle your responsibilities. To do so requires that they measure your

performance. The evaluation process is similar to your perceptions in each college course in which

you enroll. During your first class meeting in each course, one of your initial goals is to find out how

your performance will be evaluated. In a business environment, you want to know what they expect,

i.e., how they will measure your performance. While you won’t be earning letter grades in the business

world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or

perhaps dreaded walking papers.

Tools of Performance Measurement

Managers use a number of tools to measure performance. The approach to measurement depends on

what will be measured and against what benchmark the performance will be measured. A benchmark

can be viewed as a goal to meet, or a standard that management expects its employees to achieve. A

significant management component involves planning, which is accomplished through the use of

budgets. Recall from financial accounting that the primary...