Financial Management: An Introduction To Management Accounting

　　 1. Why? Administration accounting management

Accounting serves the management of a company. Its role is to describe the operation of the company with data and facts, thereby helping the management to make reasonable decisions. Comparatively speaking, financial accounting is for the decision makers outside the company. The financial statements produced are mainly for investors, board of directors and other relevant personnel. (learning to read financial statements)

Management accounting can help managers get answers to the following questions:

How will the decisions I make affect the cost and revenue of the company? What is the performance of a department (subsidiary) in the company? What product cost exceeds the budget and what product cost is lower than the budget? What products or services should the company focus on developing?

Three important concepts:

1. Management accounting

Management accounting is for the management of enterprises. The financial personnel of the company determine, quantify, analyze, and plan the relevant information of the company, and explain and communicate the meaning of these information to the management to make decisions for the management.

2. Financial accounting

Financial accounting mainly produces data and information used by outsiders. These outsiders include banks, shareholders, suppliers, governments and regulators.

3. Decision making

Decision making refers to the choices made to achieve certain goals. In enterprises, the main responsibility of managers is decision making. Managers sometimes need to make very important and complex decisions, but most decisions are simple daily decisions.

Question: which of the following statements is true about management accounting?

A and management accounting provide information for external decision-makers.

B and management accounting help management to make better decisions.

C, business decisions are always complicated.

D, financial accounting helps managers decide which products to focus on.

Answer: B yes.

　　 Two. management accounting Field

Some of the major areas of management accounting include:

1, the impact of output changes on costs.

Financial personnel will set quantitative output indicators for various business activities within the enterprise. In this way, they can calculate how the changes produced will affect costs and profits.

2. Plan and control

Planning refers to setting goals and determining how to achieve them; control refers to the implementation of plans and the adjustment of plans according to the actual implementation of the plan. The quantitative form of the plan is the budget, including the general budget and the flexible budget. By comparing the execution results and budgets of the plan, performance reports and variance analysis can be obtained as feedback for the implementation of the plan.

3. Capital budgeting

Capital budgeting refers to the planning and control of projects that affect more than one year.

4, cost apportionment (apportionment)

For a company, how to share costs is a very important step in the decision-making process. Cost sharing affects every aspect, from product mix optimization to performance evaluation. We will learn more about cost sharing later.

Question: please judge: according to what we have learned before, which of the following items belong to the category of management accounting?

A, plan and control answer: Yes.

B, capital budgets: Yes.

C, independent audit answer: No.

D, shareholder voting proxy solicitation: No.

E, cost sharing answer: Yes.

　　 Three. cost

How will the output change affect the cost?

Managers need to understand the costs associated with various types of business activities in order to control costs. That's what financial people do. They can identify business activities (such as maintenance and maintenance) and quantify their outputs. As a result, the cost of this activity can be determined. The relationship between "business activity output cost" is called "cost driver".

Cost can be divided into variable cost and fixed cost.

This relationship between "cost output and profit" is used by managers to understand how output changes affect costs, thereby affecting profits. For example, a tour operator will consider how the number of tourists will affect the cost of their operation.

Important points of knowledge:

1. Cost drivers

Cost drivers are any events and situations that lead to changes in resource consumption, quality and cycle time. A job may have multiple motivations. Cost drivers do not need quantification, but they have important influence on the choice of operational motivation and resource drivers. In short, cost drivers are factors that lead to changes in production costs. As long as they lead to changes in costs, they are cost drivers.

2, fixed costs

Fixed cost, or fixed cost, refers to the cost that the total cost can remain unchanged within a certain period of time and within a certain volume of business, which is not affected by the increase or decrease in the volume of business.