Managerial Accounting (5 ed.)

Abstract

Managerial accounting, also referred to as management accounting, focuses on the financial insight needed for an organization to achieve success. In the words of the Institute of Management Accountants, Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy. 1 As you will see throughout the book, managerial accounting is very different from financial accounting. Financial accounting focuses on providing stockholders and creditors with the information they need to make investment and lending decisions. This information takes the form of financial statements: the balance sheet, income statement, statement of shareholders' equity, and statement of cash flows. On the other hand, managerial accounting focuses on identifying, interpreting, analyzing, and implementing the financial information internal management needs to run the company efficiently, effectively, and profitably. This information takes many forms depending on management's needs. To understand the kind of information managers need, let's first look at their primary responsibilities.