Types of Accounting in

an Organization

Presented by Pawan, PGPSE Student of

AFTERSCHOOOL
www.afterschoool.tk
 Management Accounting
• Management accounting measures and reports financial and
non-financial information that helps managers make
decisions to fulfill the goals of an organization
• Managers use management accounting information to
– choose, communicate and implement strategy
– coordinate product design, production and marketing decisions
• Management accounting focuses on internal reporting
• Management accounting is future oriented

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 2-3

 Financial Accounting
• Financial accounting measures and records business
transactions and provides financial statements that
are based on generally accepted accounting
principles (GAAP)
• Managers are responsible for the financial statements
issued to investors, government regulators, and other
parties outside the organization
• Financial accounting focuses on external parties
• Financial accounting reports on what happened in the
past

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 2-3

 Cost Accounting and Cost
Management
• Cost accounting measures and reports
information relating to the cost of acquiring and
utilizing resources
• Cost accounting provides information for
management and financial accounting
• Cost management describes the approaches
and activities of managers in short-run and
long-run planning and control decisions
• These decisions increase value of customers
and lower costs of products and services
• Cost management is an integral part of a
company’s strategy

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 3-4

Management Accountants and
Strategy
• Strategy specifies how an organization matches its
own capabilities with opportunities in the
marketplace to accomplish its objectives
• Strategy examples
– Quality products or services at low prices (WestJet)
– Unique products or services at higher prices (Clublink)
• Management accountants provide information to
management such as
– Who are our customers and suppliers
– Sensitivity of market to price, quality and service
– Industry characteristics (size, growth)

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 4-6

 Planning and Control
Management Management
Decisions Accounting System

PLANNING Budgets Financial

• increase advertising • pages sold, rates per representation
rates page, revenue of plans
Feedback

CONTROL
Action Accounting System Recording
• implement rate • invoices / receipts transactions
increase recorded in ledger in accounts

Performance Performance
Evaluation Comparing
Reports
• comparison of actual budgeted and
• pages sold, rate per
and budgeted revenues page, revenue actual results

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 6-8

 Key Management Accounting
Guidelines
Cost-Benefit Approach
• spend resources if they promote decision making
that better attains the organization’s goals in
relation to the cost of these resources

Behavioral and Technical Considerations

• systems are not confined exclusively to technical matters
• always consider the influences of human activity

Different Costs for Different Purposes

• define "cost” depending on the situation under
consideration

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 8 - 9

 Line and Staff Relationships
• Line management is directly responsible for attaining
the objectives of the organization
– manager in a manufacturing division

• Staff management exists to provide advice and

assistance to line management
• management accountant

• Chief financial officer (CFO) oversees

• Controllership, Treasury, Tax, and Internal Audit
functions in the organization

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 9 - 10

Functions of Management
Accounting
• Management accountants perform three functions

Scorekeeping
• accumulate data and report reliable results to all
levels of management
Attention-directing
• make visible opportunities and problems on which
managers need to focus
Problem-solving
• conduct comparative analysis to identify the best
alternatives in relation to the organization’s goals

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Page 11

 Four Themes of Value
Enhancement
1. Customer Focus
• attract and retain profitable customers
2. Value-chain and supply-chain analysis
• manage these critical functions

3. Key success factors (KSFs)

• keep attention focused on critical factors relative to
our competitors

4. Continuous improvement and benchmarking

• never-ending search for higher levels of performance

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Page 12 - 15

Key Themes in Management Decision Making

Customer
Focus

Value-Chain Key Success Factors Continuous

and • Cost and Efficiency Improvement
Supply-Chain • Quality And
Analysis • Time Benchmarking
• Innovation

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Page 13

 The Value Chain
• Sequence of business functions in which
utility (usefulness) is added to the products
or services of an organization
• Management accounting helps managers to
administer each of these business functions

Product,
Research Customer
Service
and Production Marketing Distribution Service
Process
Development
Design

Management Accounting
Submitted by Pawan, PGPSE student of AFTERSCHOOOL Page 14
 E-Business Value Matrix

Business Operational Breakthrough

Criticality High
Excellence Strategies
(Importance of
the application
to the success of
the business)
New Rational
Low Fundamentals Experimentation

Low High

Practice Innovation
(Creating new markets or new
ways of doing business)

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Page 16

 Ethical Guidelines
• Professional accounting organizations play an
important role in promoting high standards of
ethics in the accounting profession

• Code of Professional Ethics

• Society of Management Accountants of Canada (SMAC)
• Act in a responsible manner
• Maintain independence
• Maintain confidentiality of information
• Serve with courtesy and good faith
• Maintain standards of competence

Submitted by Pawan, PGPSE student of AFTERSCHOOOL Pages 15 - 20

 Thanks

Ch. 1, Slide 15
Submitted by Pawan, PGPSE Student of AFTERSCHOOL
 Submitted by Pawan, PGPSE Student of AFTERSCHOOL

AFTERSCHOOL AFTERSCHO Ch. 1, Slide 16