Name: Vaje, Mark Joseph I.

Course/Y.R/Sec.: BSBA MM 2-2

UNIT 1 INTRODUCTION TO MANAGERIAL ACCOUNTING

MODULE #1 – DEFINITION, OBJECTIVES, SCOPE AND LIMITATIONS
OF
MANAGERIAL ACCOUNTING
Managerial accounting was introduced in Module 1 and covered the
following topics: definition, objectives, scope, and limitations within the
management process. According to the Institute of Management
Accountants (IMA), “managerial accounting is a profession that involves
partnering in management decision making, developing planning and
performance management systems, and providing expertise in financial
reporting and control to assist management in the formulation and
implementation of an organization’s strategy.” Providing managers with
financial and nonfinancial decision-making information is a function of
management accounting. Managers use accounting information to better
inform themselves before making decisions within their organizations,
allowing them to manage and control more effectively. Management
accounting refers to the area of accounting that provides information to
managers to aid in decision-making. Managing effectively is what
management accounting is all about. It also aids management in all of its
tasks, such as planning, organizing, staffing, and providing direction and
control. Management accounting, on the other hand, refers to the area of
accounting that provides economic and financial data to managers and
other internal users. Management accounting has a broad range of
applications. It is primarily concerned with using financial data to resolve
business issues and make rational decisions based on scientific reasoning.
Management accounting covers, but is not limited to the following areas:
Financial Accounting, Cost Accounting, Budgeting and Forecasting,
Revaluation Accounting, Cost Control Procedures, Statistical Method,
Inventory Control, Reporting, Taxation, Methods and Procedures Design
and Installation, Internal Audit, Office Services, Financial Management, and
Interpretation. And also there is the limitations of managerial accounting.
Based on Records, Lack of knowledge and understanding of related
subjects, Intuitive Decisions, Lack of Continuity and Coordination, No
Substitute of Administration, Lack of Objectivity, Unquantifiable Variables,
Costly, Not in Final Stage, Psychological Resistance.

MODULE #2 – ROLE OF MANAGERIAL ACCOUNTING AND ITS

DIRECTION TOWARD A SPECIFIC FIELD
This module focuses on managerial accounting’s role in the
management process and the discipline’s movement in a particular
direction. We also discussed the roles of management accounting in terms
of planning, directing and motivating, and controlling, as well as the
differences between financial and managerial accounting and the need for
management accounting in both for-profit and nonprofit organizations.
Costing out services, products, and other management-relevant items is
facilitated by management accounting. Provide data for the purposes of
planning, controlling, and improving the situation in real time. Make
operational decisions easier for managers with the goal of increasing
operational efficiency for the company. Additionally, it assists with long-
term investment planning. Management accounting data serves a purpose
and is required. Planned action comes first, then motivation and direction
follow, and finally control comes last. All of the aforementioned
management tasks involve some sort of decision-making. Managers
require data to help them make decisions. Management accountants are
the ones who provide this kind of data. Although management accountants
and financial accountants both play important roles in an organization,
there are important distinctions between the two professions. Management
accounting is primarily concerned with completing tasks and generating
reports that provide financial decision-making information to company
executives about the overall operations of the company. The primary goal
of financial accounting is to provide the company’s financial status to
external parties, such as banks, boards of directors, stockholders, and tax
authorities. Also, management accounting can be utilized in both for-profit
and nonprofit organizations.
MODULE #3 – MANAGEMENT ACCOUNTING INFORMATION SYSTEM

In this module, we explored the importance and benefits of the

Management Accounting Information System, as well as the differences
between its internal and external users. By providing timely information on
internal operations, a management accounting information system aids
businesses in running more smoothly. Managers must have detailed
information on specific processes in order to keep costs under control and
make sound decisions. There are specific needs for each business and
industry. A key benefit of a management accounting information system is
that it gives managers the data they need to make well-informed decisions
and perform a deeper analysis of operational issues that affect the
business. Employees will be able to accomplish more in less time by
working more efficiently. Additionally, employees at all levels can access
information about their departments and groups, such as inventory levels.
However, having a management accounting information system has
disadvantages. It is expensive and therefore financially burdensome for the
company; it necessitates the hiring of additional IT staff to oversee and
maintain the system; it necessitates the training of employees in order for
the system to be used effectively; and it necessitates the payment for an
upgrade in the future due to the knowledge of the system. There’s the
difference between Internal and external users of accounting information.
Internal users of accounting information are the people or group of people
inside the business organization. Examples of internal users are owner,
prospective investors, creditors, and management. While external users
are people outside the business entity (organization) who use accounting
information. Examples of external users are government, banks,
customers, investors, potential investors, and supplier.
 MODULE #4 – STANDARDS OF ETHICAL CONDUCT FOR
MANAGEMENT ACCOUNTANTS
Module 4 covered managerial accountants’ ethical standards.
Managerial accounting is concerned with how a manager should carry out
their responsibilities in accordance with relevant laws, regulations and
technical standards. Management accountants owe a duty to their
organizations. They serve their profession, the general public, and
themselves by upholding the highest ethical standards of behavior.
Competence, confidentiality, integrity, and credibility are among the ethical
standards. Management accountants are in charge of ensuring that they
maintain a high level of professional expertise by constantly updating their
knowledge and skills. Comply with all applicable laws, rules, and technical
standards in the performance of their duties as an employee. Provide
timely, accurate, clear, and simple decision-support information and
suggestions. You must change sentence structures and use a thesaurus to
recognize and express professional limitations or other constraints that may
limit your ability to make responsible judgments or perform successfully.
Confidentiality requires management accountants to keep information
secret unless permitted or required by law and to inform all necessary
parties on how to use private information appropriately. Keep an eye on
subordinate operations to ensure compliance. Don’t use confidential
information in an unethical or illegal manner. Genuine conflicts of interest
must be avoided by management accountants if they are to maintain their
integrity. Keep in touch with coworkers on a regular basis to avoid any
potential conflicts of interest. Let everyone know if there are any potential
conflicts. Stay away from anything that could put your integrity in jeopardy
while you’re trying to fulfill your responsibilities. Also, refrain from taking
any actions that could harm the profession’s reputation, whether you take
them yourself or support someone who does. To maintain their credibility,
management accountants must communicate information in a fair and
objective manner, and disclose all relevant information that could have an
impact on how the intended audience interprets the reports or
recommendations. When faced with significant ethical issues, management
accountants should follow the established policies of the organization
bearing on the resolution of such conflict when applying the standards of
ethical conduct. Management accountants may have difficulties identifying
unethical behavior or resolving an ethical conflict.

MODULE #5 – OBJECTIVES AND LIMITATIONS OF FINANCIAL

ANAYSIS
In module 5 we discussed the six basic financial statements and their
contents. The objectives of financial statements as well as the limitations of
financial analysis will also be discussed. Financial statements are the most
widely used and most comprehensive way of communicating financial
information about a business enterprise to users of the reports. The
balance sheet is also referred to as a statement of financial condition
because it shows the assets, liabilities, and the difference between their
totals at the end of the period for an organization. An income statement
shows a company’s assets, liabilities, and current and forecast financial
condition. It is one of the most important income statements. U.S.
Securities and Exchange Commission (SEC) auditing and financial
reporting requirements specify what data and items must be recorded or
disclosed in this report. This report summarizes all equity transactions,
including the issuance or acquisition of shares, dividend payments, and
gains or losses. It also includes narrative explanations and critical
annotations on the figures, as well as quantities and other crucial
information to help you better understand them. Financial statement
analysis includes tools and procedures that allow analysts to study
historical and current financial statements in order to evaluate the
performance and financial condition of a company and forecast future risks
and opportunities. It’s also known as the process of assessing the
company’s past, present, and future financial position. The output of a
financial analysis can be a helpful decision-making tool because it can
reveal important trends and correlations. Financial statements are required
to determine whether or not a company is profitable enough and whether or
not earnings have increased or decreased from the previous year. They
also assist in assessing the company’s financial health, including its ability
to repay both short-term and long-term obligations. Financial statements
are produced by organizations in order to communicate their financial
situation to other stakeholders. They provide insight into the company’s
weak spots, allowing management to take corrective action. Forecasting
and budgeting are aided by financial statements as well. To hide a bad
financial situation, some companies falsify their financial statements.
Analyses based on these fictitious financial figures may be misleading
because of the window dressing. A specific item may be treated in more
than one way, making comparisons across industries difficult. Financial
statements are historical by nature, reflecting past events and facts. A
postmortem report is all that can be produced by an analysis that relies
solely on prior data. It’s possible that one analyst reads “net profit” as net
profit before taxes, while another analyst interprets the term differently.