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BUS 254 (50)
Chapter 1

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Business Administration
BUS 254
Arsineh Garabedian

• Managerial Accounting = concerned with providing information to managers for internal use (planning, controlling, decision making) o Reports capturing sales, costs, orders received, benchmarking are created • Financial Accounting = concerned with providing information to external users o Follows GAAP and annual and quarterly statements are prepared Manager’s activities are planning, directing and motivating, and controlling Planning • Selecting a course of action and specifying how action will be implemented • Looking at alternatives  picking best one o Also look at demand for resources against alternatives  Revenues and Costs • Budgets = detailed plan for the future in quantitative terms o Prepared by controller (manager in charge of Acc Department) Directing and Motivating • Oversee day-to-day activities and make sure everything functions smoothly o Motivate and direct people (assigning job, answer questions, settle disputes, etc.) Controlling • Control = process of instituting procedures and obtaining feedback to ensure everything is functioning effectively and towards company goals • Feedback = Accounting and other reports helping managers monitor performance and problems o Performance Report = comparing budgeted data to actual data • The Planning and Control Cycle = flow of management activities (plan  direct  control  plan) Differences between managerial and financial accounting 1) Emphasis on the Future - Strong emphasis on the future for managerial accounting - Financial provides information of the past - Use data to improve the future of the company 2) Relevance of Data - Managerial accounting wants information that is relevant even if it is not objective or verifiable - Financial accounting wants objective and verifiable data 3) Less emphasis on precision - MA takes more consideration in non-monetary figures (customer satisfaction) i. Don’t have to be as precise as FA 4) Segments of an Organization - Segments = any part of organization that can be evaluated independently - MA focuses on segments while FA focus on the entire company 5) GAAP - MA are not bounded by GAAP as much as FA i. Because the information is only for internal use 6) Not mandatory - FA is mandatory for external users (taxing personnel) while MA is not Organizational Structure • Decentralization = delegation of decision-making authority throughout an organization by providing lower level managers authority o Organizational chart = visual diagram of the firm’s structure from reporting, communication, and responsibility for managers • Line = position in organization that is directly related to the achievement of organization’s basic objectives • Staff = position that is only indirectly related to achievement of organization’s basic objectives o Supportive and provide serv
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