Chapter 1: Introduction to Managerial Accounting

Financial Accounting

Provide stockholders and creditors with information that they need to make efficient investment and lending decisions

Managerial Accounting

Identify, interpret, analyze, and implement the financial information that management needs to run the company efficiently, effectively, and profitably

Planning

Settings goals for the business and determining the means to achieve the goals

Budgets

Quantitative expressions of goals

Directing

Overseeing day-to-day activities of the business

Controlling

Comparing actual results of business operations to the plan (budget) and making adjustments based on this feedback to keep the business working toward its goal

Controlling

Management analyzes the impact of a recent advertising campaign by comparing budgeted sales to actual sales

Planning

Management decides to increase sales by 30% next year

Directing

Management uses information on product costs to calculate and determine sales prices

Manufacturing Firms

Companies that convert materials into finished goods

Merchandising Firms

Companies that purchase finished products from manufacturers and sell the products to consumers

Service Firms

Companies that provide services to customers