Question

How does Managerial Accounting (ACCT222) benefit students who are not majoring in accounting? Be specific rather than general, and discuss concepts learned in the course. (1-2 full page(s) single spaced.)

Answer 1

MANAGERIAL ACCOUNTING AND ITS BENFITS

Managerial accounting is the process of identifying, measuring, analyzing, interpreting and communicating information for the pursuit of an organization's goals. This branch of accounting is also known as cost accounting. The key difference between managerial and financial accounting is managerial accounting information is aimed at helping managers within the organization make decisions, while financial accounting is aimed at providing information to parties outside the organization.

The key purpose of accounting information is to assist decision-makers such as investors, managers and government agencies. Financial accounting involves compiling a business's annual transactions in the form of financial statements that are viewable by the public. However, managerial accounting is specifically used to produce information for managers within an organization.

Planning

A key focus of managerial accounting is planning for the future. Managerial accountants develop reports that are more detailed than financial accountants. They can include information about specific products, market reach and regional information.

Controlling

The information obtained from managerial accounting gives managers a greater sense of control over an organization's success. Since the information provided in managerial accounting reports are only used internally, they do not have to adhere to generally accepted accounting principles, or GAAP.

Decision-making

Management accounting also considers how certain decisions may affect a manager's behavior. A manager makes long-term decisions that have a lasting impact, so managerial accounting is used to develop plans and convey information with the goal of improving management decisions.

Problem-solving

Contrary to financial accounting, which focuses on historical reports, managerial accounting considers actual performance and compares it to goals and future outlooks. This information is used to identify issues that may arise in budgets or production changes and develop alternatives.