Den-Mark’s
Education and Professional Development Centre
Module 1
Introduction to Managerial Accounting
The unit introduces managerial accounting along with the fundamental principle of the text, which is the importance of using managerial accounting data in decision-making. Students are introduced to the importance of such data to decision-making by discussing the primary responsibilities of a manager: planning, directing, and controlling. To help students understand the importance of managerial accounting, financial and managerial accounting are contrasted and compared. Managerial accounting has internal users relying on relevant information explicitly prepared for management’s needs. In contrast, financial accounting has external users using reliable and objective information in the form of financial statements.
The role of managerial accounting is illustrated by comparing the perception and reality of accounting and through the presentation of a typical organizational structure and the roles and skills required of management accountants. In addition to their traditional roles, management accountants also play an essential role in planning, analyzing, interpreting accounting data and providing decision support. Management accountants are often business advisors, analysts, and finance professionals. To fulfill these roles, management accountants today must possess both technical and nontechnical competencies, such as solid knowledge of both financial and managerial accounting, analytical skills, knowledge of how business functions, ability to work on a team, and oral and written communication skills. Management accountants are trusted and valued business advisors. Managerial accounting knowledge is essential to all careers, including sales professionals and musicians. The IMA is the professional association for management accountants, which also develops standards of ethics and professional conduct. It provides a forum for research, practice development, education, knowledge sharing, and advocacy of the highest ethical and best practices in management accounting and finance. The Certified Management Accountant (CMA) certification, which reinforces the technical skills required for management accountants, is issued by the IMA and requires professionals to pass a rigorous two-part exam, gain two years of relevant professional experience, and maintain continuing professional education. The IMA has also developed principles and standards to help management accountants deal with ethical challenges.
Learning Objectives
After studying, students should be able to:
- Identify managers’ three primary responsibilities
- Distinguish financial accounting from managerial accounting
- Describe the roles and skills required of management accountants within the organization
- Describe the role of the Institute of Management Accountants (IMA) and apply its ethical standards
- Discuss the business trends and regulations affecting management accounting
