Textbook Notes (363,222)
Canada (158,274)
Accounting (242)
ACCT 2230 (113)
Chapter 1

Chapter 1 Managerial Accounting Notes

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University of Guelph
ACCT 2230
Elliot Currie

Chapter 1 Managerial AccountingThe Business EnvironmentFinancial accounting phase of accounting that deals with providing info to shareholders creditors and others outside the organizationFocused on producing reports of financial statsstatementsManagerial Accounting The phase of accounting that deals with providing info to managers for use in planning and controlling operationsfor decision making Managerial accountants prepare a variety of reports which can compare actual results to compare how well managers performed others give timely updates on key indicators such as sales some are used as investigation into specific problemsThe work of managerstheir need for managerial accounting informationManagers carry out 3 main activities1 Planning selecting course of actionspecifying how it will be implemented2 DirectingMotivating Getting people to carry out plansrun operation3 Controlling Ensuring plan is actually carried outis appropriately modified if circumstances change Managers must now especially in a globalizing society have a strategy to attract customersset themselves apart from competitors must attract customersCustomer value propositions are the essence of strategy Tend to fall into 3 categories1Customer intimacyReally value customers individual needs Eg Tim Hortons Comfort Inns etc2 Operational Excellencecan deliver products more efficiently cheaper etc walmart3 Product leadershipoffer higher value products Eg Rogers RIM etcPlanning Identify alternatives first then select the one that does the best job of furthering organizations objectives When deciding to open new company location top management looks at the sales volumes profit marginscosts of the companys established in similar markets This data plus projected sales volume data at proposed new locations to estimate profitsBudget Usually presented annually A detailed plan for the future usually expressed in quantitative terms usually made by the controller Manager in charge of the accounting dept in an organization Each outlet manager will be given a target sales volume income expenses lossesemployee trainingthis will all be collected analyzed and summarized into budgets made by management accountantsDirectingMotivatingManagers must in addition to planning for future must oversee day to day activitieskeep organization a float must assign employees to tasks and motivate them answer questions solve problems Daily sales reports used in daytoday decision makingControllingManagers make sure plan is being followedFeedback accountingother reports that help managers monitor performancealso focus on problems andor opportunities that might otherwise go un noticed Performance Report A detailed report comparing budgeted to actual resultsShows where additional attention is neededThe results of managers activities The role of managerial accounting is to inform and facilitate management decisions throughout these processes so that managers efforts result in efficient achievement of company goalsThe planningcontrol cycleThe flow of management activities through planning directingmotivating and controllingthen back to planning all of these involve decision making QuickTime and a decompressorare needed to see this picture
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