Garrison Chapter 1.
Managers plan , direct and go through control process.
Managerial accounting focuses mainly on planning and controlling. They are interrelated and function
a. The directing and motivating activity is a daily activity where managers keep the organization
b. The control function compares the goal and the reality and gives feedback-Below target, above
c. Planning and control cycle- keep making sure that the actual performance matches with the
goal. If it doesn’t , then you go back to planning and see what needs to be changed to improve
You have to have a big picture of what the organization has to do.
Business plans set the tone for all activities that are set to happen in the organizational future, helps set
guidelines for evaluation of performance.
a. Financial accounting is for external users, Historical, objective and verifiable, requires precision in
information produced, includes summarized data and follows GAAP and provides reports.
b. Managerial accounting is for managers, future oriented, and is used for planning and control with
timeliness and detailed reports while it may not following any GAAP rules.
Decentralization- where power is distributed among a number of person, decision makers are usually
located at the operational level
Centralization – where power is distributed among one or few persons, decisions take place at the top
Line managers- deals with making things and providing services to the customers