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Managerial Accounting

Assignment # 1

Submitted to: Sir Zakir Satti


Submitted by: Hira Mustafa
Reg # 7143-FMS/MBA/F15
Date: September 17, 2017
1-1 How does managerial accounting is different from financial accounting?
Managerial accounting deal with operational reports which are generated for internal users of a
particular company, while Financial accounting deal with the reports which are developed for
external users. Financial accounting focuses on the financial results based on past data while
managerial accounting focuses on decisions that affect the future. Managerial accounting
emphasizes on relevance, timeliness and segment reports while on the other hand financial
accounting emphasizes on objectivity and verifiability, precision and companywide reports. One
other important difference between both of them is that for Managerial accounting it is not
necessary to follow rules of GAAP/IFRS while for Financial accounting it is necessary to follow
these standards.

1-2 Pick any major television network and describe some planning and controlling
activities that its managers would engage in.
We can take company XYZ as an example, as we know planning for any organization includes
defining goals and developing strategies to achieve those goals. Some planning activities in
which company XYZ can involve itself would be determining who is their target audience? What
are the preferences of their target audience? And then deciding what sort of shows they should
arrange? And at which time they schedule their shows? How much money they should allot to
each show and much more. While controlling activities of XYZ company could include
determining that either ratings of their shows are meeting with the competitors shows or not, or
are they missing any show which their competitor is providing to their audience but they are not
providing, or either they over allocated budget to one project and not to the other one.

1-3 Why do companies prepare budget?


Companies prepare budgets in order to allocate proper resources to each project and to prepare
future financial plans. It ensures that you will always have enough finance for the things you
want to do and for the things that are important to you. Budget helps the companies to identify
and eliminate the weak financial points.

1-4 Why is Managerial accounting relevant to the business majors and their future
careers?
No doubt business majors are quite different from Managerial accounting but still Managerial
accounting is relevant to all of these because all of these have to go through the same processes
of planning, controlling and making decisions. For instance Marketing Managers have to plan
which advertising campaign they should start for a particular product and with control they need
to check that either that campaign is working or not and in last they make a lot of decisions such
as whether they should continue particular campaign or not or if they are continuing it then for
how much time they are going to continue.
1-5 Why is Managerial accounting relevant to the accounting majors and their
future careers?
It is relevant to the accounting majors and their future as Institute of Managerial Accounting
estimates that 80% of accountants work in non-public work environments where they need to
improve their organizational performance by using planning, controlling and decision making
skills which are key pillars of Managerial Accounting.

1-6 Why do management accountants needs to understand their company's


strategy?
They need to understand it because until unless they will not get insights of their company's
strategy, they will not be able to develop plans to achieve their goals, accurately control various
elements and make decisions that will be in favor of their organization.

1-7 Pick any large company and describe its strategy using the framework in
chapter.
BMW is a large company which is using Product Leadership strategy which has inspired people
around the world by its fascinating products and services for individual mobility. This company
is successfully growing because of its product leadership in its market.

1-8 Why do companies that implement Lean Production tend to have minimal
inventories?
Such companies produce goods or services just in time to satisfy their customer needs, and make
units when customer put order for them, which results in lower inventory levels for these
companies.

1-9 Why are leadership skills important for managers?


We all know that organizations are managed by people who have their own personal interests,
beliefs and insecurities. So managers must have leadership skills if they want to control
co-workers efforts to attain organizational goals.

1-10 Why ethics important to business?


Ethics are important for any business as ethical behavior act as a lubricant which ensures the
smooth running of economy. Without ethics, economy would not operate efficiently, companies
would not keep eye on quality management factor and offer their products at much high price.
And also ethical behavior and corporate social responsibility bring sufficient benefits to business.