INTRODUCTION TO
MANAGEMENT
ACCOUNTING
Prepared by: Rusty John T. Toledo
Faculty OJT
Management Accounting
A field of accounting that provides
economic and financial information for
internal users, particularly the managers
or decision-makers in an organization
the practice of identifying, measuring,
analyzing, interpreting, and
communicating financial
information to managers for the pursuit
of an organization's goals.
Measure and reports financial and
nonfinancial information that help
managers make decisions to fulfill the
goals of an organization. Managers use
management accounting information to
choose, communicate and implement
strategy.
Management functions
1. Planning – involves
a) Setting of immediate, as well as long-range
goals for the organization;
b) Predicting future conditions that are
expected to prevail;
c) considering the different means or
strategies by which the goals set my be
achieved; and
d) deciding which of the strategy should be
used to attain such goals.
2. Directing and motivating
Involves overseeing the day-today
activities, seeing to it that the organization
is functioning smoothly and the members of
the organization are mobilized to carry out
plans.
3. Controlling
Involves checking the performance of
activities against the plan or standards set
and deciding what corrective actions to take
should there be any deviation between the
actual and planned/standard performance.
Activities Involved in Management
Accounting
1. Determining, accumulating, and
explaining costs – both manufacturing
and non-manufacturing cost.
2. Computing or determining product
cost/service cost
3. Determining cost behavior
4. Providing assistance to management in
profit planning and budgeting
5. Accumulating and presenting data
which may be used by managers in
decision making
6. Providing bases for cost control with the
use standard cost and other planned
objectives
7. Assisting managers in developing the
company’s prices both external and
internal transactions
Application of Management Accounting
Business – managerial accounting
provides the economic information needed
by the businesses’ managers so they can
attain their profit and other economic goals
Non-profit Organizations – these
organizations likewise need the economic
information provided by management
accountants in attaining their
organization’s objectives.
Principles governing the design of Management
Accounting Systems
1. The system should help to establish the
decision-making authority over the
organization’s assets.
2. The information generated by the
system should support planning and
decision-making.
3. The reports should provide a means for
performance monitoring and evaluation
Management Accounting vs. Financial
Accounting
Management Accounting Financial Accounting
Users of Report Internal users: officers and External users:
managers stockholders, creditors,
concerned government
agencies
Purpose To provide internal users To provide external
with informat on that may users with information
be by managers in carrying about the organization’s
out the functions of financial position and
planning, controlling, results of operations.
decision-making, and
performance evaluation
Types of Different types of reports, Primarily financial
Reports such as budgets, financial statements and the
projections, cost analyses, accompanying notes to
etc. depending on the such statements.
specific needs of
management.
Management Accounting Financial Accounting
Basis of Reports Reports are based on a Reports are based almost
combination of historical, exclusively on historical
estimated and projected data
data.
Standards of In preparing reports, the Reports are prepared in
Presentation management of a company accordance with generally
can set rules to produce accepted accounting
information most relevant to principles and other
its specific needs pronouncements of
authoritative accounting
bodies
Reporting entity Focus of reports is on the Financial reports relate to
company’s value chain, such the business as a whole
as business segment,
product-line, supplier or
customer
Period Covered Reports may cover any time Reports usually cover a
period 0 year, quarter, year, quarter, or month.
month, week, day etc.
Reports may be required as
frequently as needed.
