1-1

Financial
Financial &
& Managerial
Managerial Accounting
Accounting
The Basis for Business Decisions

THIRTEENTH EDITION

Williams Haka Bettner

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 1-2

Chapter
ACCOUNTING:
1 INFORMATION FOR
DECISION MAKING

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 1-3
The
accounting
process

Accounting
“links” decision
makers with Accounting
Economic
economic
activities information
activities  and
with the results of
their decisions.

Actions
(decisions) Decision
makers
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 1-4

Types
Types of
of Accounting
Accounting Information
Information

Financial Tax

Managerial

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 Information
Information System
System
1-5

Information
Information Financial
Financial Decisions
Decisions
Users
Users Information
Information Supported
Supported

Investors
Investors Provided
Provided 
Performance
Performance

Creditors  evaluations
Creditors Profitability
Profitability evaluations

Managers
Managers 
Stock
Stock

Owners  investments
Owners Financial
Financial investments

Customers
Customers position 
Tax
Taxstrategies
strategies
position

Employees
Employees 
Labor
Laborrelations
relations

Regulators  
Resource
Regulators Cash
Cashflows
flows Resource
-SEC
-SEC allocations
allocations
-IRS
-IRS 
Lending
Lending
-EPA
-EPA decisions
decisions

Borrowing
Borrowing

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 Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
1-6

System
System
 Interpret
and record
business
transactions.

Payment

Car

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 Basic
Basic Functions
Functions of
of an
an Accounting
Accounting
1-7

System
System
 Interpret  Classify
and record similar
business transactions
transactions. into useful  Summarize
reports. and
communicate
information to
decision
makers.

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 External
External Users
Users of
of Accounting
Accounting
1-8

Information
Information

•Owners
•Creditors
•Labor unions
•Governmental agencies
•Suppliers
•Customers
•Trade associations
•General public

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 1-9

(Specific)
Provide information about economic Objectives
resources, claims to resources, and
changes in resources and claims.
of
Financial
Reporting
Provide information useful in
assessing amount, timing and
uncertainty of future cash flows.

Provide information useful in making

investment and credit decisions.
(General)
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 Objectives
Objectives of
of External
External Financial
Financial
1-10

Reporting
Reporting

Balance Sheet

Income Statement
The primary
Statement of Cash Flows
financial
statements.

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 Characteristics
Characteristics of
of Externally
Externally Reported
Reported
1-11

Information
Information
AAMeans
Meanstoto
an
anEnd
End
Usefulness
Usefulness Broader
Broader than
than
Enhanced
Enhancedviavia Financial
Financial
Explanation
Explanation Statements
Statements

Based
Basedonon Historical
Historicalin
in
General-Purpose
General-Purpose Nature
Nature
Assumption
Assumption

Results
Resultsfrom
fromInexact
Inexactand
and
Approximate
ApproximateMeasures
Measures
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 Users
Users of
of Internal
Internal Accounting
Accounting
1-12

Information
Information

 Board of directors
 Chief executive officer (CEO)
 Chief financial officer (CFO)
 Vice presidents
 Business unit managers
 Plant managers
 Store managers
 Line supervisors

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 T y p ic a l S im p le O r g a n iz a tio n C h a r t 1-13

B o a rd o f
D ir e c t o r s
(O w n e rs )

C h ie f E x e c u t iv e
O ffic e r
(C E O )

B u s in e s s U n it V .P . H u m a n V .P . In fo rm a tio n C h ie f F in a n c ia l
M anager R e s o u rc e s S e r v ic e s O f fic e r ( C F O )

P la n t P la n t
M anager M anager

P la n t P la n t
A c c o u n ta n t A c c o u n ta n t

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 Objectives
Objectives of
of Management
Management Accounting
Accounting
1-14

Information
Information

To
Tohelp
helpachieve
achieve
goals
goalsand
andmissions
missions

To
Tohelp
helpevaluate
evaluate
and
and reward
reward
decision
decisionmakers
makers

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 Characteristics
Characteristics of
of Management
Management
1-15

Accounting
Accounting Information
Information

Timeliness
Timeliness
Identify
Identify
AAMeans
Meanstoto Decision
Decision
an
anEnd
End Maker
Maker

Measures
Measuresof of Oriented
Oriented
Efficiency
Efficiencyand
and Toward
Toward
Effectiveness
Effectiveness Future
Future

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Integrity
Integrity of
of Accounting
Accounting Information
Information
Institutional Features
Generally Accepted Accounting Principles
(GAAP)
Financial Accounting Standards Board
Securities and Exchange Commission
Internal Control Structure
Audits
Legislation

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Integrity
Integrity of
of Accounting
Accounting Information
Information
Professional Organizations
American Institute of Certified Public
Accountants
Institute of Management Accountants
Institute of Internal Auditors
American Accounting Association

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Integrity
Integrity of
of Accounting
Accounting Information
Information
Competence, Judgment and Ethical Behavior
Certified Public Accountants (CPAs)
Certificate in Management Accounting (CMA)
Certificate in Internal Auditing (CIA)
Code of Professional Conduct

CP
A
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Integrity
Integrity of
of Accounting
Accounting Information
Information
Careers in Accounting
Public Accounting
Management Accounting
Governmental Accounting
Accounting Education

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 1-20

End
End of
of Chapter
Chapter 11

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