CHAPTER

INTRODUCTION
TO
MANAGEMENT
ACCOUNTING
1 Definition of Management Accounting

2 Comparison of Management Accounting and

Financial Accounting

3
Management functions and role of accounting
information in the management

4 Characteristic of management
accounting information

5 Role of Management Accountant

Management accounting is the process of
providing financial information
to internal users to help them in
decision making.
Financial Accounting VS Management Accounting

Internal and external User Internal User

Focus on the past Focus on the future

Purpose : reporting profit/loss and financial

Purpose : assisting decision making
position

Financial information Financial and non-financial information

Report a business according to sub-unit, product

Report a business as a whole
or customer

Need to comply GAAP No rules or standard to comply

 P Planning

Function C Controlling

D Decision Making
 S Setting objectives

Planning S Selecting strategies

T To be achieved
 E Ensure strategy on the right
tract

Controlling B Based on performance

evaluation

F Follow up/correction if
necessary
 Making cost and revenues
M analysis
Decision
Making C Choosing the best
alternatives

I Involved in every activities

including planning and
controlling
 Accuracy
• Coincide with the needs
of management functions

Timeliness
• Obtained at the time the
information is required

Understandibility
• Using terms that are
easily understood
 Relevance • Capable of making a
difference in a decision

• Benefits of information
Cost
must outweigh the cost
effectiveness
of providing it.

• Easily adaptable to the

Flexibility needs decisions to be
made
 Assist management in
Provide information and
achieving the
accounting reports
organization's objectives.

ROLE

Assist management in
Assist management in
controlling and
decision making
performance evaluation