Online Class: Managerial Accounting 101
with CEU Certificate*
have taken this course
Managerial Accounting: The Unseen Powerhouse of Decision-Making
In the intricate realm of accounting, while financial accounting often takes the limelight with its essential functions like audits, budgets, and financial statements, there's a quieter yet profoundly impactful player: managerial accounting.
Managerial accounting, though not as recognized as its financial counterpart, plays a pivotal role in an organization's decision-making processes. It transcends the confines of traditional number-crunching, delving into realms that aren't strictly numerical. Consider this: How do you quantify customer satisfaction, employee performance, or production efficiency? It's the managerial accountant's expertise that bridges the gap between abstract data and actionable insights.
Managerial Accounting vs. Financial Accounting: While financial accounting provides a panoramic view of an organization's economic health, managerial accounting focuses on granular analyses. For instance, while financial accounting might declare a company profitable, managerial accounting could pinpoint that one lagging department is offsetting the stellar performance of others. Think of it as a medical check-up; if financial accounting states the overall health is good, managerial accounting provides detailed bloodwork showing potential vitamin deficiencies or elevated levels.
The Role of Managerial Accounting in Decision Making: Managerial accountants take varied data, from product rates to employee efficiency, and craft comprehensive reports, translating the intricate details into digestible information. Managers armed with these insights can chart out strategic directions, ensuring the organization remains adaptive, efficient, and relevant.
Evolution of Managerial Accounting: Though its roots stretch back over a century, the recent past has seen a renewed interest in managerial accounting. As businesses navigate the ever-evolving landscape, the nuanced intelligence provided by this branch of accounting is being recognized as invaluable.
Lesson One: What Is Managerial Accounting? Dive deep into the core tenets, understanding what sets managerial accounting apart from its counterparts.
Lesson Two: Managerial Accounting in the Organization Examine the structural role and influence of managerial accounting within diverse corporate environments.
Lesson Three: Specifics of Managerial Accountants Explore the day-to-day operations, challenges, and opportunities faced by these professionals.
Lesson Four: Traditional Managerial Accounting A look back at the origins, understanding foundational methodologies and their relevance today.
Lesson Five: Looking at Policies and Company Components Unpack the interplay between managerial accounting and organizational policies, and how it aids in dissecting the company's various components for analysis.
Lesson Six: Activity Based Costing Delve into the specifics of this costing method, understanding its significance in allocating overhead costs more accurately to products.
Lesson Seven: Balanced Scorecard Learn about this strategic planning and management system used extensively in industry, government, and nonprofit organizations worldwide to align business activities with vision and strategy.
In conclusion, as you journey through this course, you'll unravel the multifaceted world of managerial accounting, gaining a newfound appreciation for its silent yet substantial influence on organizational success. With real-world examples, detailed explanations, and the latest data, you'll emerge well-equipped to harness the power of managerial accounting, driving your organization towards unparalleled heights. Dive in, and let's decode the secrets of this unsung hero of the corporate world.
Accounting, like music, comes in many different forms. It is not a single entity that encompasses all needs, but a varied type of specialty that has the ability to help an organization in a variety of ways. Accounting, many may not realize, has many different styles, such as Lean Account, Auditing, Cost Accounting, Social Accounting, to name a few. While all these types of accounting are interesting in their own rights, the one form that we will be looking at will be one of the most important type for a company, managerial accounting.
Managerial accounting, sometimes called management accounting, is a type of accounting that is concerned with the provisions and the use of accounting information to a manager in an organization. Managerial accounts provide this service because it helps the managers make business decisions that will be better for the company based on the information provided.
Unlike financial accounting, which is reported publicly so that shareholders and investors can determine the strength of the company, managerial accounting is not reported publicly and is confidential, used only by the management. As well, unlike financial accounting, managerial accounting tends to be more forward looking than historical. Financial accounting looks at what happened in the past year or quarter, while forward looking managerial accounting helps to make decisions based on future financial data.
The Three Areas of Managerial Accounting
- Strategic Management. This is the advancement of the role of the management accountant to make the accountant on strategic par with the entire organization.
- Performance Management. This is the development of business decision making that will manage the performance of the company.
- Risk Management. This contributes to the practice of identifying, measuring, managing, and reporting any risks to the overall achievement of the goals that the company has set for itself.
In addition to the three focuses discussed above, managerial accounting has six aims that it uses as a guide for its use:
- Creating strategies for the business to succeed in the future.
- Planning and building activities for the business.
- Helping to make decisions in the business.
- Creating the best and most optimal use of resources in the company.
- Helping with the financial report preparation of the company.
- Protecting and safeguarding the assets of the company.
History of Managerial Accounting
Managerial accounting has a long history in the Western world, dating back to the early 19th century during the time of the Industrial Revolution. It was during this period that many companies were heavily controlled by the owner-manager who borrowed money based not on credit, but on their personal relationships with others who had money.
These companies did not have a shareholder structure, and there was little debt in these companies so there was no need to create large and complex financial reports. This is where managerial accounting came in. It was sophisticated, but easy to understand and it provided all the essential information that was needed for large scale productions such as steel and textiles.
By the 20th century, companies were facing new pressures through regulation, federal taxation, creditors, and capital markets. As a result, many firms had to raise funds from sources of capital far removed from traditional areas. To be able to do this, companies had to use detailed financial reports that would be able to show the strength of the company, based on historical data, to investors and creditors.
This new type of accounting had to be based on outside suppliers of capital that used those financial statements. Due to this new emphasis on inventory costing procedures by accountants at the turn of the century, there was a profound change in management accounting. Through the subsequent decades, management accountants would increasingly focus their efforts to ensure that the financial accounting objectives were met, and with financial reports released on time. With this shift from managerial accounting to financial accounting, managerial accounting became stagnant. Up until the 1980's, management accounting practices were pushed to the side as financial accounting methods that had been used since the days of World War One kept companies looking back rather than forward.
During the better part of the 20th century, while historical and financial accounting reigned supreme, there were some forward thinking companies that looked at managerial accounting as the method that would help their business the most.
Accounting in companies has generally focused on how the company did in the past, as a basis to gain more investors for the future. However, this is beginning to change as companies start looking forward towards how their companies will do in the future. Through the use of management accounting, companies can make the decisions that will help their businesses in the future and keep the company going strong into the future.
Financial accounting may have been the dominant form of accounting during the 20th century, but times have changed and now companies are looking to the 21st century as the era of management accounting.
In subsequent chapters we will learn about how management accounting differs from traditional accounting, how it fits into an organization, and the various types of managerial accounting methods that exist out there.
This is a dynamic new world that many companies have ignored since the early 1900's. Those companies willing to look at management accounting as the wave of the future, and not from the past, will be the companies that will do well. They will need management accountants to do it, making managerial accounting one of the go-to fields for accountants in the coming years.
- Completely Online
- Printable Lessons
- Full HD Video
- 6 Months to Complete
- 24/7 Availability
- Start Anytime
- PC & Mac Compatible
- Android & iOS Friendly
- Accredited CEUs
Lesson One: What Is Managerial Accounting?
Lesson Two: Managerial Accounting in the Organization
Lesson Three: Specifics of Managerial Accountants
Lesson Four: Traditional Managerial Accounting
Lesson Five: Looking at Policies and Company Components
Lesson Six: Activity Based Costing
Lesson Seven: Balanced Scorecard
- Define managerial accounting.
- Describe managerial accounting in the organization.
- Describe the specific duties of managerial accountants.
- Describe traditional managerial accounting.
- Describe policies and company components that affect managerial accounting.
- Define activity based costing.
- Summarize a balanced scorecard for a company's accounting practice.
- Demonstrate mastery of lesson content at levels of 70% or higher.
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- "I have had a great experience in all courses instructed by Dr. Metodija S., and I'm so grateful to him." -- Anna N.
- "The course was very useful to me. I learned a lot of helpful things for our business. The instructor was great. Thank you." -- Heidi H.
- "I found that all the lessons were very powerful in explaining the course material." -- Fred K.
- "I wanted an overview of managerial accounting as I didn't feel like I understood it before. It was a good overview. What is an awesome instructor." -- Sarah K.
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