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BA 213 - Chapter 1 Notes

The document outlines the key concepts and formulas of managerial cost accounting, including that sales equal variable costs plus fixed costs plus profit. It also describes the two main types of accounting as financial accounting, which reports externally and emphasizes past financial data, and managerial accounting, which reports internally to aid in planning and decision making and emphasizes future-oriented and timely information.

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105 views1 page

BA 213 - Chapter 1 Notes

The document outlines the key concepts and formulas of managerial cost accounting, including that sales equal variable costs plus fixed costs plus profit. It also describes the two main types of accounting as financial accounting, which reports externally and emphasizes past financial data, and managerial accounting, which reports internally to aid in planning and decision making and emphasizes future-oriented and timely information.

Uploaded by

Cassie Lemons
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

BA 213 – Chapter 1 Notes

Formula for the basic concepts of Managerial Cost Accounting:

Sales = Variable Cost + Fixed Cost + Profit

Expanded:

Selling Price times quantity of units = (variable cost per unit times quantity of units) + total fixed cost for
the company + profit.

Accounting – Financial and Operational Data:

 Recording
 Estimating
 Organizing
 Summarizing

There are two types of Accounting: Financial and Managerial

Financial Accounting:

 Reports to those outside the organization: owner, creditors, tax authorities, and regulators
 Emphasizes financial consequences of past activities
 Emphasizes objectivity and verifiability
 Emphasizes precision
 Emphasizes companywide reports
 Must follow GAAP/IRS
 Mandatory for external reports

Managerial Accounting:

 Reports to managers inside the organization for: Planning, Controlling, and decision making.
 Emphasizes decisions affecting the future
 Emphasizes relevance
 Emphasizes timeliness
 Emphasizes segment reports
 Need not follow GAAP/IRS
 Not mandatory

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