Chapter 1 Analitic Accounting, Apuntes de Contabilidad Analítica

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Chapter 1

An Introduction to Management and Cost

Accounting

Managerial Accounting and Financial

Accounting

Managerial accounting

provides information

for managers of an

organization who

direct and control

its operations.

Financial accounting

provides information

to stockholders,

creditors and others

who are outside

the organization.

Work of Management

Should we close a shop?

Should we enter a new area?

Ousource telecommunication activities?

What rate should be charge for a room? At what time should the restaurant be open?

Which product should be promoted?

Should we launch a new product?

Work of Management

Planning

Controlling

Directing and

Motivating

Planning

Planning

Strategic planning: long term plans

Short term plans: more detailed

Planning

Planning

Plans are expressed in budgets.

A budget is a management plan in quantitative terms (monetary or not).

Controlling

• Is concerned with ensuring that the plan is followed.
• Accountants prepare reports that provide feedback to managers.
• Performance reports: Compares budgeted to actual results.

Controlling

Controlling

Sales Revenue for a product line ( € )

Budgeted Actual Deviation

Total nº of units sold line of product Market evolution

% Market share

Price per unit

Deals on discounts

Sales mix

Production cost for a product

Functions of Management Accounting

1. Provide relevant information for managers.
2. Provide information required for meeting external financial accounting requirements. - Goods are stated at their historical costs. If they have

been produced by the company, they will be stated at

their cost of production: INVENTORY AND ASSET

VALUATION

• Financial accounting rules require that we match costs

with revenues to calculate profit.

Marriott Income Statement

Total Revenue 10.908,

Cost of Revenue (Total) -9.673,

Gross Profit 1.235,

Selling/General/Administrative Expenses 722,

Research & Development 0,

Interest Expense (Income) 0,

Unusual Expense (Income) 787,

Other Operating Expenses 0,

Operating Income -274,

Marriott International Inc Report

Comparison of Financial and Managerial

Accounting

Financial Managerial

Accounting Accounting

1. Users Reports to those outside^ Reports to those inside the organization the organization
2. Time focus Emphasis on past activitiesEmphasis on future decisions
3. Verifiability Emphasis on^ Emphasis on versus relevanceobjectivity and verifiability^ relevance
4. Precision versus Emphasis on^ Emphasis on timeliness precision^ timeliness
5. Subject

Summarized data for Detailed data by the entire organization segments of an organization

6. Requirements

Must follow Need not follow IAS IAS Mandatory Not mandatory

• Cash & Short term investments 115, Assets
• Total Receivables, Net 838,
• Total Inventory 1.444,
• Prepaid Expenses 0,
• Other Current Assets 454,
• Total Currents Assets 2.851,
• Property, plant & Equipment 1.362,
• Goodwill,Net 875,
• Intangibles, Net 731,
• Long Term Investments 249,
• Note Receivable – Long term 452,
• Other Long Term Assets, Total 1.413,
• TOTAL ASSETS 7.933,
• End of Chapter