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Chapter 1

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Ryerson University
ACC 406
Santoso Sugianto

Accounting 406 Introduction to Managerial Accounting Study Notes CHAPTER 1 Introduction to Managerial Accounting Learning Objectives1 Explain the meaning of managerial accountingAn internal accounting system designed to support the information needs of managers It is not bound by the GAAP Generally Accepted Accounting PrinciplesThere are 3 objectives to managerial accounting to provide information for planning the organizations actions to provide information for controlling an organizations actions and to provide information for making effective decisionsPlanningcontrollingfeedback2 Explain the differences between managerial accounting and financial accountingFinancial accounting focuses on the external users must follow GAAP provides objective and verifiable financial information reports on events that have already happened focuses on overall firm performance more aggregated viewpoint and is selfcontainedManagerial accounting focuses on the internal users there are no gidlines it must follow may be financial or nonfinancial more subjective includes historical events but focuses on future events focuses on performance of entities product lines department and managers multiple disciplines 3 Identify and explain the current focus of managerial accountingIt supports management focus on customer value total quality management and timebased consumptionInformation about valuechain activities and customer sacrifice such as postpurchase costs is collected and made availableActivitybased management is a major innovative response to the demand for more accurate and relevant managerial accounting informationThe nature of managerial accounting information system may depend on strategic position of the firmo Cost leadership strategy o Product differentiation strategy o Lean accounting 4 Describe the role of managerial accountants in an organizationThey are responsible for identifying collecting measuring analyzing preparing interpreti
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