Managerial Accounting 101


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  • 7
    Lessons
  • 16
    Exams &
    Assignments
  • 5
    Hours
    average time
  • 0.5
    CEUs
  • 473
    Students
    have taken this course
 
 
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Course Description

Managerial accounting is not as widely used as other forms of accounting, nor is it as known. While companies concern themselves with financial accounting methods like audits, budgets and financial statements, they often completely ignore the forward-thinking methods of managerial accounting.

Managerial accounting is a form of accounting that deals not only with financial information, but information that is not always easy to quantify into numbers and reports. Things like employee performance, efficiency, product rates and customer satisfaction stats are all things that managerial accountants deal with. They take that information and put it into reports that are easy for managers to understand. By doing this, managerial accountants help managers make the important decisions to turn the company in a new direction, or help it continue on as a profitable and respected organization.

Financial accounting looks at the company as a whole. The net profit of the company, the revenue and expenses of the company and more. It does not look at the parts that make up the whole. This is what managerial accounting does. It takes the company and breaks it into parts that can be studied and analyzed. Maybe one department is bringing down the rest like a lead weight attached to a strong chain. If this is happening, the methods of managerial accounting will find it and that will help managers take the information and use it to make the company better and more efficient as a result.

Managerial accounting is not new, but it is revolutionary and despite originating over 100 years ago, companies are only now realizing the true power of this amazing form of company management.

 
 

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. 

This is what makes managerial accounting so important in terms of helping managers come to decisions.

The Three Areas of Managerial Accounting

Managerial accounting has three main areas where it puts most of its focus:
 
  1. Strategic Management. This is the advancement of the role of the management accountant to make the accountant on strategic par with the entire organization.
  2. Performance Management.  This is the development of business decision making that will manage the performance of the company.
  3. 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:

  1. Creating strategies for the business to succeed in the future.
  2. Planning and building activities for the business.
  3. Helping to make decisions in the business.
  4. Creating the best and most optimal use of resources in the company.
  5. Helping with the financial report preparation of the company.
  6. 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. 

In recent years, at the beginning part of the 21st century, new economic forces are creating changes in accounting and the practice of management accounting is gaining steam and becoming more and more prominent in organizations around the world. 

Conclusion

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.


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  • Printable Lessons
  • Full HD Video
  • 6 Months to Complete
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Universal Class is an IACET Accredited Provider
 
 

Course Lessons

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Lesson One: What Is Managerial Accounting?

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. 39 Total Points
  • Lesson 1 Video
  • Take Poll: Managerial Accounting Course
  • Complete Assignment: An Introduction
  • Complete: Lesson 1 Assignment
  • Complete Exam: Lesson One: What Is Managerial Accounting?

Lesson Two: Managerial Accounting in the Organization

Before the 1980's, management accountants were seen as something that was not needed in business because while business had changed greatly in the previous 60 years, managerial accounting had changed little. 34 Total Points
  • Lesson 2 Video
  • Take Poll: Management Methods
  • Complete: Lesson 2 Assignment
  • Complete Exam: Lesson Two: Managerial Accounting in the Organization

Lesson Three: Specifics of Managerial Accountants

As we have mentioned previously, managerial accountants have a wide and a varied series of skills and abilities that they bring to an organization. 34 Total Points
  • Lesson 3 Video
  • Take Poll: Professional Organizations
  • Complete: Lesson 3 Assignment
  • Complete Exam: Lesson Three: Specifics of Managerial Accountants

Lesson Four: Traditional Managerial Accounting

Managerial accounting has changed over the years to keep up with the changing world. Companies work differently than they once did, and that means things like managerial accounting have had to adapt to stay alive. 35 Total Points
  • Lesson 4 Video
  • Complete: Lesson 4 Assignment
  • Complete Exam: Lesson Four: Traditional Managerial Accounting

Lesson Five: Looking at Policies and Company Components

Companies have set policies in place that dictate how they do things, how they make money, and how they produce products and services through the help of the employees who make up their workforce. 33 Total Points
  • Lesson 5 Video
  • Complete: Lesson 5 Assignment
  • Complete Exam: Lesson Five: Looking at Policies and Company Components

Lesson Six: Activity Based Costing

Activity based costing is a type of costing model that identifies activities within an organization, and assigns the cost of each of those activities to all the products according to the actual consumption of each of them. 33 Total Points
  • Lesson 6 Video
  • Complete: Lesson 6 Assignment
  • Complete Exam: Lesson Six: Activity Based Costing

Lesson Seven: Balanced Scorecard

This last lesson looks at the balanced scorecard, which is a tool used for performance management. 68 Total Points
  • Lesson 7 Video
  • Take Poll: Let us know what you think of this course
  • Take Survey: Program Evaluation Follow-up Survey (End of Course)
  • Complete: Lesson 7 Assignment
  • Complete Exam: Lesson Seven: Balanced Scorecard
  • Complete: The Final Exam
276
Total Course Points
 

Learning Outcomes

By successfully completing this course, students will be able to:
  • 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.
  • Know a balanced scorecard for a company's accounting practice, and
  • Demonstrate mastery of lesson content at levels of 70% or higher.
 

Additional Course Information

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Course Title: Managerial Accounting 101
Course Number: 7550324
Languages: English - United States, Canada and other English speaking countries
Course Type: Professional Development (Self-Paced, Online Class)
CEU Value: 0.5 IACET CEUs (Continuing Education Units)
CE Accreditation: Universal Class, Inc. has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).
Grading Policy: Earn a final grade of 70% or higher to receive an online/downloadable CEU Certification documenting CEUs earned.
Assessment Method: Lesson assignments and review exams
Instructor: Dr. Metodija Stojanovski
Syllabus: View Syllabus
Duration: Continuous: Enroll anytime!
Course Fee: $65.00 (no CEU Certification) || with Online CEU Certification: $90.00

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Student Testimonials

  • "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.
  • "I found that all the lessons were very powerful in explaining the course material." -- Fred K.

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