• Unit 1: Managerial Accounting

    We begin by examining the differences between financial and managerial accounting. The primary difference pertains to the audience: who will read the reports? Financial accounting information is geared toward external users, while managerial accounting is for internal users. Managerial accounting is integral to making operational and strategic decisions. 

    In this unit, we examine the manufacturing process and related financial accounting transactions, so you can differentiate between product costs and selling and administrative costs. The flow of costs in cost accounting mirrors the physical flow of the inventory. For example, a pizza parlor first buys the direct materials they put on their pizzas (cheese, tomatoes, and pepperoni). When a customer orders a pizza, the restaurant assembles the direct materials, bakes (work in process) and completes a pizza (finished goods), and delivers it to the customer.

    Completing this unit should take you approximately 3 hours.

    • Upon successful completion of this unit, you will be able to:

      • explain the differences between financial accounting and managerial accounting;
      • explain the functions of various accounting personnel, such as the controller and accounting staff;
      • describe standards of ethical conduct in the field of accounting and how the field addresses ethical conflicts;
      • explain the benefits of computerized accounting systems;
      • use cost terminology to describe the flow of manufacturing costs; and
      • prepare an income statement for a manufacturing company.

    • 1.1: Financial Accounting vs. Managerial Accounting

      • Characteristics of Managerial Accounting URL

        Read the chapter introduction, then click "Next Section" to read section 1.1. As you read, pay attention to the differences between financial accounting and managerial accounting. Also, evaluate what types of managerial accounting information you use or produce in your job. Were you surprised to realize that you are already familiar with some parts of managerial accounting?

    • 1.2: Key Finance and Management Accounting Personnel

      • Planning and Control Functions Performed by Managers URL

        Read section 1.2. Good managers are always planning for the future and assessing the present. The functions that enable management to continually plan for the future and assess implementation are called planning and control. Planning is the process of establishing goals and communicating these goals to employees of the organization. The control function is the process of evaluating whether the organization’s plans were implemented effectively.

      • Key Finance and Accounting Personnel URL

        From the text, you read that Dana Matthews, president of Sportswear Inc., a publicly-traded company, has many responsibilities. Like most managers of large publicly-traded companies, she has delegated much responsibility to her managers and has many questions that need answers. Read more about this in section 1.3.

    • 1.3: Ethical Issues Facing the Accounting Industry

      • Ethical Issues Facing the Accounting Industry URL

        Read section 1.4. Mark Twain told us that there are three types of lies, “lies, damned lies and statistics.” Management accountants produce many statistics! As a management accountant you need to be aware of ethical issues and avoid practices that mislead and misdirect those who will use your information.

    • 1.4: Computerized Accounting Systems

      • Computerized Accounting Systems URL

        Selection of a computer system for a company is more than a software or hardware decision—it is a complex problem that usually requires scrupulous research and a full rethinking of the organization's culture and reporting relationships. Today, most companies have a computerized financial system that creates financial and management accounting reports. Read more in section 1.5.

    • 1.5: Product Costs

      • Cost Terminology URL

        Read section 1.6. Classifying costs and revenue correctly is critical to consistent financial reporting. A consistent report has uniform meaning within the company. In this section you will learn some of the basic terminology used to classify costs. This section of the textbook is important to your success in this course, so be sure to complete the exercises at the end of the section before you move on.

      • How Product Costs Flow through Accounts URL

        Costs are associated with, and accumulated in, broad accounts out of necessity. In section 1.7, you will learn how costs are assigned to those accounts and how those costs can "flow" through another cost account. Be sure to complete the exercises at the end of this section before you move on.

    • 1.6: Income Statements for Manufacturing Companies

      • Income Statements for Manufacturing Companies URL

        Companies who manufacture products report different accounts on their income statements than other types of companies, such as service or merchandising companies. In section 1.8, you will review the income statements of manufacturing companies.

    • 1.7: Basic Math Review

      • Math for Accounting Page

        Many of us could use a refresher from our high school math courses! The following videos review some basic math skills that you will apply to accounting.