CHAPTER 1 MANAGEMENT ACCOUNTING AND BUSINESS ENVIRONMENT
Presented by:
Daw Su Myat Naing(Tutor) Department of Commerce
MANAGERIAL ACCOUNTING AND FINANCIAL ACCOUNTING • Managerial accounting provides information for managers inside an organization who direct and control its operations.
• Financial accounting provides information to stockholders, creditors and others who are outside the organization.
DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING Financial Accounting
Managerial Accounting
• External persons who make financial decisions
• Managers who plan for and control an organization
• Historical perspective
• Future emphasis
• Emphasis on verifiability
• Emphasis on relevance for planning and control
• Emphasis on precision • Primary focus is on the whole organization • Must follow GAAP and prescribed formats
• Emphasis on timeliness • Focuses on segments of an organization
• Need not follow GAAP or any prescribed formal
THE CHANGING BUSINESS ENVIRONMENT
New tools for managers!
Just-In-Time Total Quality Management Process Reengineering Theory of Constraints
JUST-IN-TIME (JIT) SYSTEMS
Receive customer orders.
Complete products just in time to ship customers.
Schedule production. Receive materials just in time for production.
Complete parts just in time for assembly into products.
TOTAL QUALITY MANAGEMENT (TQM) TQM improves productivity by encouraging the use of fact and analysis for decision making and if properly implemented, avoids counter- productive organizational infighting.
Systematic problem solving using tools such as Benchmarking
Continuous improvement Central focus is serving customers
PROCESS REENGINEERING A Business process is diagrammed in detail.
Every step in the business process must be justified.
The process is redesigned to eliminate all non-value-added activities.
THEORY OF CONSTRAINTS A constraint (also called a bottleneck) is anything that prevents us from getting more of what we want
The constraint in a system is determined by the step that has the smallest capacity.
THE PLAN-DO-CHECK-ACT CYCLE
Act
Check
Plan
Do
THE CODE OF CONDUCT OF MANAGERIAL ACCOUNTING
Competence
Confidentiality Integrity Objectivity
OBJECTIVES OF MANAGEMENT ACCOUNTING • To provide qualitative and quantitative information to management. • To help management to decision making
• To help management in overall control • To play effective role in controlling cost and maximizing profit.