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Welcome to the home page of accounting for management dot com
"Accounting for management dot com" is about
managerial accounting. Home page is focused on the introduction to
managerial accounting. For all other managerial accounting articles,
concepts and help you can click on the links at left under the heading articles.
What is Managerial Accounting (Management
Accounting / Cost Accounting)?
Managerial accounting is concerned with providing information to
managers-that is, people inside an organization who direct and control
its operation. In contrast, financial
accounting is concerned with providing information to stockholders,
creditors, and others who are outside an organization.
Managerial
accounting provides the essential data with which the organizations are
actually run. Managerial accounting is also termed as management
accounting or cost accounting. Financial accounting provides the scorecard by which a
company's overall past performance is judged by outsiders. Managerial
accountants prepare a variety of reports. Some reports focus on how well
managers or business units have performed-comparing actual results to
plans and to benchmarks. Some reports provide timely, frequent updates
on key indicators such as orders received, order backlog, capacity
utilization, and sales. Other analytical reports are prepared as needed
to investigate specific problems such as a decline in the profitability
of a product line. And yet other reports analyze a developing business
situation or opportunity. In contrast, financial accounting is oriented
toward producing a limited set of specific prescribed annual and quarterly financial statements in accordance with
Generally Accepted Accounting Principles (GAAP).
(Ray H. Garrison,
Eric W. Noreen 1999).
Financial accounting vs. Managerial accounting: Managerial accounting differs from financial accounting in a number of ways
that are briefly discussed below.
Click here
for a detailed study of the
difference
between financial and managerial accounting.
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Financial Accounting |
Managerial Accounting |
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Reports to those outside the organization owners, lenders, tax
authorities and regulators.
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Reports to those inside the organization for planning, directing
and motivating, controlling and performance evaluation.
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Emphasis is on summaries of
financial consequences of past activities.
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Emphasis is on decisions affecting the future.
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Objectivity and verifiability of data are emphasized.
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Relevance of items relating to decision making is emphasized.
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Precision of information is required.
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Timeliness of information is required.
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Only summarized data for the entire organization is prepared.
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Detailed segment reports about departments, products, customers,
and employees are prepared.
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Mandatory for external reports.
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Managerial accounting is managers oriented therefore its study must be
preceded by some understanding of what managers do, the information managers
need, and the general business environment. Accordingly we shall briefly examine
these subjects.
Need for Managerial Accounting Information: Every organization-large and small-has managers. Someone must be
responsible for making plans, organizing resources, directing personnel, and
controlling operations. Every where mangers carry out three major
activities-planning, directing and motivating, and controlling.
Continue
Reading.
History of Managerial Accounting:
Managerial accounting has its roots in the industrial revolution of the 19th
century. During this early period, most firms were tightly controlled by a
few owner-managers who borrowed based on personal relationships and their
personal assets. Since there were no external shareholders and little
unsecured debt, there was little need for elaborate financial reports.
Continue Reading.
Code of
Conduct for Management Accountants:
Practitioners of management accounting and financial management have an
obligation to the public, their profession, the organization they serve, and
themselves, to maintain the highest standards of ethical conduct. In
recognition of this obligation, the Institute of management Accountants has
promulgated the following standards of ethical conduct for practitioners of
management accounting and financial management. Adherence to these standards
internationally is integral to achieving objective of management accounting.
Continue Reading.
The Certified Management Accountant (CMA): A management accountant who
possesses the necessary qualification and who possesses a rigorous
professional exam earns the right to be known as a certified Management
Accountant (CMA). In addition to the prestige that accompanies a
professional designation, CMAs are often given greater responsibilities
and higher compensation than those who do not have such a designation.
Information about becoming a CMA and CMA program can be accessed on the
Institute of Management
Accountants To become a
Certified Management Accountant, the following four steps must be
completed:
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File an application for admission and
register for the CMA examination
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Pass all four parts of the CMA
examination within a three year period
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Satisfy the experience requirement of
two continuous years of professional experience in management and/or
financial accounting prior to or within seven years of passing the CMA
examination.
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Comply with the standards of ethical
conduct for practitioners of management accounting and financial
management.
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In Business |
How's the Pay?
In 1998 Ronald
Madison reported that, with normal progress in a larger
corporation, a management accountant should be earning $45,000
with in three to four years and after five to six years,
$60,000. The salaries would be even higher now.
Source: Ronald Mason, How do I start career in financial
management?" imastudents.org magazine, winter
1998, pp. 16-20.
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Sources:
Free
Managerial Accounting Articles
Introduction to
Managerial Accounting,
Ray H. Garrison Eric W. Noreen
Cost and Management Accounting, Adolph Matz Milton F. Usry
Advanced Financial Accounting
Managerial Accounting Help
Financial and Managerial Accounting
Accounting Management TD Gupta |
