Nguyen Thi Tuong Tam

1
[email protected]

MANAGEMENT ACCOUNTING COURSE SCHEDULE

Textbook
Topic Week Topics Readings
Introduction to Management
1 1 Accounting Chapter 1 [1]& [2]
2 2 Costs and Costing system Chapter 2 [1] & [2]
Marginal costing and Absorption
3 3 costing Reports Chapter 3 [2]
4 4 & 5 Job costing and Process costing Chapter 5 and 6 [2]
Chapter 8 [1]; Chapter
5 6 & 7 Cost - Volume - Profit Analysis 9 [2]
Relevant information for decision Chapter 9 [1]; Chapter
6 8 & 9 making 10 [2]
10 Midterm exam revision
11 &
7 12 Budgeting Chapter 15 [1]
13 & 2
8,9 14 Standard Costing &Variance Analysis Chapter 17 [1]
15 Final exam revision

1
1 What is Management Accounting?

2 Roles of Management Accounting

3 Management accounting vs. financial accounting

4 Management accounting systems

LO1: Define management accounting in terms of

value creation,
LO2: Describes the major differences between
management accounting and financial accounting,
LO3: Explain where management accountants are
located in the organizations
LO4: Understand the roles of management
accounting in organization
LO5: Describe the factors that may influence the
design of management accounting system . 4

2
 1 What is management accounting?
What is accounting?
“Accounting is the process of identifying,
measuring and communicating economic
information to permit informed judgements
and decisions by users of the information”
(American Accounting Association).

Identifying Recording Summarizing

Reporting 5

1 What is management accounting?

Accounting information’s users

Managements
Stakeholders (shareholders, employees, etc.)
Taxation Office
Suppliers
Customers
Others (consultants, analysts, etc.)
6

3
 1 What is management accounting?
Two types of accounting

In order to satisfy the demands of using

accounting information from different users,
accounting includes two types
• Financial Accounting
• Management Accounting
Accounting

Financial Management
Accounting Accounting 7

1 What is management accounting?

Financial accounting

• Accountability results in the production of

financial statements, primarily for those interested
parties who are external to the business
• Income Statement, Balance Sheet, Cash Flow Statement

• Provides an explanation or report in financial terms

about the transactions of an organization

4
 1 What is management accounting?
Management accounting definition

Management accounting is the process of

Identifying
Measuring
Analyzing
Interpreting
Communicating information

2 What is management accounting?

Management accounting refers to the processes

and techniques that focus on the effective and
efficient use of organizational resources, to
support managers in their tasks of enhancing
both customer value and shareholder value

10

5
 2 Roles of management accounting

Provides financial and non-financial information to

- develop and implement strategy by planning for the future
(budgeting: expected income & costs);
- make decisions about products, services, prices and what
costs to incur (decision-making using expected income &
costs);
- ensure that plans are put into action and are achieved
(control: plan versus actual).

11
Planning Decision Control
making

2 Roles of management accounting?

How management accounting add values?

Providing information for decision making and planning.

Assisting managers in directing and controlling activities.
Motivating managers and other employees towards
organization’s goals.
Measuring performance of activities, managers, and other
employees.
Assessing the organization’s competitive position.

12

6
 2 Roles of management accounting

Management tasks Managament accounting

Setting targets 1
Setting financing terms
2

Planning 3 Budgeting

Implementing 5 Collecting results

Reporting
Evaluation and control 6

Decision making
13

Decision making

Transaction

Financial
Accounting

data Check Communication

Management
Accounting
14

7
 3 Management accounting vs. financial accounting
Financial accounting Management accounting
Externals: shareholders,
1. Users of creditors, banks, stock Internals
information exchange, trade union
and government
agencies; and internals

- Past - Past, current and

2. Nature of future oriented
information - Reliable, verifiable, - Subjective,
not timely relevant, timely
- Highly aggregated - Supplied at various
levels of detail to
suit managers’
specific needs

3 Management accounting vs. financial accounting

Financial accounting Management accounting

3. Regulations Accounting standards No accounting standards or

and corporations law external rules are imposed.
regulate the content of Information is generated to
external financial satisfy managers’
reports information needs

Financial data almost Both financial and non-

exclusively drawn financial data drawn from
4. Source of from the many sources: the core
data organization’s core accounting system, physical
transaction–based and operational data from
accounting system production systems and
market, customer and
economic data from
databases external to the
organization.

8
 4 Management accounting systems

Management accounting within organization

Management accounting themes
Management accounting and strategy

17

4 Management accounting systems

Managerial Accounting within organization

• A line position is directly • A staff position supports

involved in achieving the and assists line positions.
basic objectives of an Example: A cost accountant
1-18

organization. in the
manufacturing
Example: A production plant.
supervisor in a
manufacturing
plant.

9
 4 Management accounting systems
Managerial Accounting within organization

Controller: The chief managerial and financial accountant

responsibility for:
• Supervising accounting personnel

1-19
• Preparation of information and reports, managerial and
financial
• Analysis of accounting information
• Planning and decision making

4 Management accounting systems

Managerial Accounting within organization

Treasurer: Responsible for raising capital and safeguarding

the organization’s assets.
• Supervises relationships with financial institutions.
• Work with investors and potential
1-20

investors.
• Manages investments.
• Establishes credit policies.
• Manages insurance coverage

10
 4 Management accounting systems
Managerial Accounting within organization

Internal Auditor: Responsible for reviewing accounting

procedures, records, and reports in both the controller’s and
the treasurer’s area of responsibility.
• Expresses an opinion to top

1-21
management regarding the
effectiveness of the
organizations accounting
system.

4 Management accounting systems

Major Themes in Managerial Accounting

Behavioral Costs and

Issues Benefits
1-22

Information Evolution and

and Incentives Adaptation

Managerial
Accounting

11
 Cost Management Systems
Objectives
Measure the cost of resources
consumed.
Identify and eliminate non-value-

1-23
added costs.
Determine efficiency and
effectiveness of major activities.
Identify and evaluate new Cost
activities that can improve Management
performance. System

Strategic Cost Management

and the Value Chain
Product
Design
1-24

Production
Research
and
Development Marketing

Securing raw
materials and Distribution
other resources

Customer
Start Service

12
Ethical Climate of Business
The corporate scandals experienced over the last few
years have shown us that unethical behavior in
business is wrong in a moral sense and can be
disastrous in the economy. In addition to Sarbanes-

1-25
Oxley, there will likely be more reforms in corporate
governance and accounting.

Managerial Accounting as a
Career Professional Organizations

Institute of Management Accountants (IMA)

1-26

Develops
Publishes Administers
Standards of
Management Certified
Ethical
Accounting Management
Conduct for
and research Accountant
Management
studies. program
Accountants

13
 Professional Ethics

Competence

1-27
Confidentiality
Integrity
Credibility

Practice
1. Managerial Accounting is future focus.

2. Managerial Accounting must follow national

accounting standards
3. Managerial information only include cost, revenue,
profitability and other financial information of an
organisation.
4. Companies have many options in implementing
managerial accounting system into the
companies.

14
Managerial accounting can be applied to which type of
organisation?

a. Profit organisations
b. Governmental institutiona
c. Non-profit organisations
d. All of the above

1. Discuss the relationship between vision, mission,

objectives, and strategy

2. Why does managerial accounting need to use non-

financial information?
3. Why does management at different levels need different
kinds of managerial information?
4. Determine managerial accounting that needed for the
following decision making:
“Marketing manager is investigating on whether
expand new product into current market.”

15