Managerial Accounting Homework Help

Accounting knowledge is core business skill that individuals should pursue working in an organization. Individuals at management or supervisory roles find that many of their responsibilities involve knowing something about accounting. As accounting increasingly becomes decentered from the accounting department in organizations, line managers in all functional areas of business are expected to be able to prepare budgets, develop business cases for capital investment, and exercise cost control to ensure that profit targets are achieved. Managers are also expected to be able to analyze and interpret accounting information so that marketing, operations and human resource decisions are made in the light of an understanding of the financial implications of those decisions. Any of these events could trigger awareness that individuals need to know something about accounting and how money works in an organization. So managers should be well educated and equipped enough with the basic concepts of accounting and how it works.


Managerial Accounting Homework Help

According to the Chartered Institute of Management Accountants (CIMA), “Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"

 

The Institute of Certified Management Accountants (ICMA) states "A management accountant applies his or her professional knowledge and skill in the preparation and presentation of financial and other decision oriented information in such a way as to assist management in the formulation of policies and in the planning and control of the operation of the undertaking".


Managerial Accounting (also called as Accounting for Mangers or Cost Accounting) emphasizes the focus on meeting the needs of managers. It is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. It is a process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions. It stresses the interpretation (rather than the construction) of accounting information as well as a critical (rather than unthinking) acceptance of the underlying assumptions behind accounting. In short, it is the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of an organization's goals.

Every business asks few basic questions:

  1. the amount of profit made within a specific time period;
  2. the value of the raw materials and the work in process; and
  3. How much finished goods sold and how many remain to be sold?

 

The answer to each question can come only from the practice known as management accounting. The answers to these questions aid the managers to prepare for the activities, budgets and forecasts of the next time period. They also help to compare with past time periods and look at any variances that might need corrective action or improvement. These results help to control, plan, and decide.

Other questions that may be answered by management accounting are:

  1. What happens if sales volume drops?
  2. If prices are reduced, how much more will be the sales?
  3. What are your most profitable products or services?
  4. What are the fixed and variable costs?
  5. What is the breakeven point?
  6. If loan is taken to expand and the interest forces fixed costs up, what sales volume will cover those increased costs?

 

Management accounting varies, depending on whether you manufacture or retail goods and on whether you provide a product or a service. In each area, the approach to cost identification varies. However, the goal of all approaches is to aid strategic decision-making and cost management. Stated differently, management accounting information is the mechanism which can be used by managers as a vehicle for the overview of the whole internal structure of the organization to facilitate their control functions within an organization.