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    An electronic

    presentation byDouglas Cloud

    Pepperdine University

    An electronic

    presentation byDouglas Cloud

    Pepperdine University

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    Task Force Clip ArtTask Force Clip Art

    included in this electronicincluded in this electronic

    presentation is used withpresentation is used withthe permission of Newthe permission of New

    Vision Technology ofVision Technology of

    Nepean Ontario, Canada.Nepean Ontario, Canada.

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    Introduction:Introduction:

    The Role,The Role,

    History, andHistory, andDirection ofDirection of

    ManagementManagementAccountingAccounting

    CHAPTERCHAPTER

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    1. Discuss the need for management accounting

    information.

    2. Differentiate between management accounting

    and financial accounting.

    3. Provide a brief historical description of

    management accounting.

    4. Identify the current focus of managementaccounting.

    ObjectivesObjectives

    ObjectivesObjectives

    After studying thisAfter studying this

    chapter, you shouldchapter, you should

    be able to:be able to:

    After studying thisAfter studying this

    chapter, you shouldchapter, you should

    be able to:be able to:

    ContinuedContinued

    ContinuedContinued

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    5. Describe the role of management accountants in

    an organization.

    6. Explain the importance of ethical behavior for

    managers and management accountants.

    7. List three forms of certification available to

    management accountants.

    ObjectivesObjectives

    ObjectivesObjectives

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    1. To provide information for costing outservices, products, and other objects ofinterest to management.

    2. To provide information for planning,controlling, evaluating, and continuousimprovement.

    3. To provide information for decisionmaking.

    The managerial accounting system has three

    broad objectives:

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    OutputsOutputsProcessesProcessesInputsInputs

    Economic

    Events

    Collecting

    Measuring

    Storing

    Analyzing

    ReportingManaging

    Special Reports

    Product Costs

    Customer Costs

    Budgets

    Performance ReportsPersonal Communication

    UsersUsers

    Management Accounting

    Information System

    Management Accounting

    Information System

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    TheManagement Process is defined by the

    following activities:

    Planning

    Controlling

    Decision Making

    Planningrequires

    setting objectivesand identifying

    methods to achieve

    those objectives.

    Management ProcessManagement Process

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    TheManagement Process is defined by the

    following activities: Controllingisthe managerial

    activity of

    monitoring a

    plans

    implementation

    and taking

    corrective action

    as needed.

    Planning

    Controlling

    Decision Making

    Management ProcessManagement Process

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    TheManagement Process is defined by the

    following activities:

    Planning

    Controlling

    Decision Making

    Control isusually achieved

    with the use of

    feedback.

    Management ProcessManagement Process

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    Feedbackis information

    that can be used to

    evaluate or correct the

    steps being taken toimplement a plan.

    Feedbackis information

    that can be used to

    evaluate or correct the

    steps being taken to

    implement a plan.

    Management ProcessManagement Process

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    TheManagement Process is defined by the

    following activities:

    Decision

    makingis

    the process

    of choosingamong

    competing

    alternatives.

    Planning

    Controlling

    Decision Making

    Management ProcessManagement Process

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    Differentiate Between

    Management Accounting and

    Financial Accounting

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    Management AccountingManagement AccountingManagement AccountingManagement Accounting Financial AccountingFinancial AccountingFinancial AccountingFinancial Accounting

    1. Internally focused 1. Externally focused

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    Management

    accountingfocuses on

    providing

    information for

    internal users.

    Targeted UsersTargeted Users

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    ABC

    Company

    AnnualReport

    Financial

    accounting focuseson provided

    information for

    external users.

    Financial

    accounting focuses

    on provided

    information for

    external users.

    Targeted UsersTargeted Users

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    Management AccountingManagement AccountingManagement AccountingManagement Accounting Financial AccountingFinancial AccountingFinancial AccountingFinancial Accounting

    1. Internally focused 1. Externally focused

    2. No mandatory rules 2. Must follow externallyimposed rules

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    Restrictions on Inputs and ProcessesRestrictions on Inputs and ProcessesRestrictions on Inputs and ProcessesRestrictions on Inputs and Processes

    Management accounting is not

    subject to the requirements of

    generally accepted accounting

    principles.

    Management accounting is not

    subject to the requirements of

    generally accepted accounting

    principles.

    Financial accounting reporting must

    follow the accounting procedures set

    by the SEC and the FASB.

    Financial accounting reporting must

    follow the accounting procedures set

    by the SEC and the FASB.

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    Management AccountingManagement AccountingManagement AccountingManagement Accounting Financial AccountingFinancial AccountingFinancial AccountingFinancial Accounting

    1. Internally focused 1. Externally focused

    2. No mandatory rules 2. Must follow externallyimposed rules

    3. Financial andnonfinancial informa-

    tion; subjectiveinformation possible

    3. Objective financialinformation

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    Management AccountingManagement AccountingManagement AccountingManagement Accounting Financial AccountingFinancial AccountingFinancial AccountingFinancial Accounting

    1. Internally focused 1. Externally focused

    2. No mandatory rules 2. Must follow externallyimposed rules

    3. Financial andnonfinancial informa-

    tion; subjectiveinformation possible

    3. Objective financialinformation

    4. Emphasis on the future 4. Historical orientation

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    TimeTime OrientationOrientationTimeTimeOrientationOrientation

    Management

    accounting stronglyemphasizes providing

    information about

    future events.

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    Financialaccounting records

    and reports events

    that have already

    happened.

    TimeTime OrientationOrientationTimeTimeOrientationOrientation

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    Management AccountingManagement AccountingManagement AccountingManagement Accounting Financial AccountingFinancial AccountingFinancial AccountingFinancial Accounting

    1. Internally focused 1. Externally focused

    2. No mandatory rules 2. Must follow externallyimposed rules

    3. Financial andnonfinancial informa-

    tion; subjectiveinformation possible

    3. Objective financialinformation

    4. Emphasis on the future 4. Historical orientation

    5. Internal evaluation anddecisions based on verydetail information

    5. Information about thefirm as a whole

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    Management

    accounting provides

    measures and internalreports used the

    evaluate performance of

    entities, product lines,

    departments, and

    managers.

    Degree of AggregationDegree of AggregationDegree of AggregationDegree of Aggregation

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    Financial

    accounting fo