BA 131 Lecture Notes - Management Accounting, Financial Accounting, Decision-Making
Document Summary
Managerial accounting involves the provision of information to people within the organisation to help them in better decision making and improvement of the efficiency and effectiveness of the existing operations. It is for this reason that we can call managerial accounting internal reporting whereas financial accounting can be referred to as external reporting. In short managerial accounting helps managers to help them perform their functions of planning, controlling and decision making. Planning involves setting objectives, identifying alternative courses of action to achieve the objectives and choosing the best course(s) of action to achieve the objective(s): controlling. Controlling involves comparing actual results with planned results and taking corrective action to put the plans back on track: decision making. You must note that when managers are planning and controlling they are also making decisions. Examples of decisions that managers can make include shutting down a department, stopping production of a product, adding a new product line, etc.
