Chapter 1

Managerial Accounting &

the Business Environment
 Managerial Accounting and
Financial Accounting

Managerial accounting Financial accounting

provides information provides information
for managers inside an to stockholders,
organization who creditors and others
direct and control who are outside
its operations. the organization.

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 Differences Between Financial
and Managerial Accounting

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 The Changing Business
Environment

Growth
Growthofof the
theinternet
internet
Just-in-Time
Just-in-Timeproduction
production
Total
TotalQuality
Quality Business environment
Management
Management changes in the past
International
International competition
competition twenty years

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 The Changing Business
Environment

New tools for

managers!

Just-In-Time
Total Quality
Management
Process Reengineering
Theory of Constraints

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 Expanding Role of Managerial
Accounting
Increasing complexity and
size of organizations
Regulatory
environment
Factors that
Increased
increase the need for
emphasis
managerial accounting
on quality
information
World-wide
competition
Rapid development and
implementation of technology
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 Importance of Ethics
in Accounting
Ethical accounting practices build trust and
promote loyal, productive relationships with
users of accounting information.
Many companies and professional
organizations, such as the Institute
of Management Accountants (IMA),
have written codes of ethics which
serve as guides for employees.
 Code of Conduct for Management
Accountants

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 IMA Code of Ethics for
Management Accountants

Four broad areas of

responsibility:
Maintain a high level of
professional competence
treat sensitive matters with
confidentiality
Maintain personal integrity
Be objective in all disclosures

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 CAREER OPPORTUNITIES IN
MANAGEMENT ACCOUNTING

Over 2/3’s of all professional accountants

work as Management Accountants.
Management Accounting has become a route
to the top!
Leadership + Accounting Credential =
Potential for Success!!!

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 The SRC Story

Formerly Interna-
tional Harvestor
Jack Stack.
98.9% financed at
22%.
The “Game of
Business”
Philosophy.

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