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Chapter 1

ACTG 2020 Chapter Notes - Chapter 1: Enterprise Risk Management, Chief Operating Officer, Continual Improvement Process

Course Code
ACTG 2020
Douglas Kong

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Chapter 1: Introduction to Managerial Accounting
1.1 What is managerial accounting?
oManagerial accounting is the provision of accounting information for a company’s internal users.
It is using the accounting system of the company and providing it to the benefits of the managers.
There are three broad objectives for managerial accounting:
1. To provide information for planning the organization’s actions
2. To provide information for controlling the organization’s actions
3. To provide information for making effective decisions
oPlanning is the detailed formulation of action to achieve a particular end.
-It is setting objectives and identifying methods to achieve those objectives.
oControlling is the managerial activity where you monitor a plan’s implementation and take
corrective actions as needed is referred.
- This is done by comparing actual results with expected results.
-It is based on feedback as it enables managers to decide if to continue with the plan
but in a restructured, better manner.
oDecision making is the process of choosing among competing alternatives.
1.2 Comparison of managerial and financial accounting
1. Targeted users
2. Restrictions on inputs and processes
3. Type of information
4. Time orientation
5. Degree of aggregation
6. Breadth
Management Accounting Financial Accounting
oFor what?
oOrigin of
the rules?
oWhat type
of data?
oFor whom?
oInternally focused /Internal
information for decision
making at different levels
of organization
oNo mandatory rules
o(Specific to organizations)
oFinancial and non financial
o(quantitative and
qualitative) /
oEmphasis on the future
oFor every manager (not
only accountants)
oExternally focused / information
about the firm as a whole
oMust follow externally imposed
rules (IASB)
oFinancial information
oHistorical orientation
oFor investors and external
oTriple Bottom Line is a reference to establishing objectives with the organization that reflect the
company’s concern for its social and environmental impact.
1.3 Current Focus of managerial accounting
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