Financial

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Financial Managerial Accounting

• The Basis for Business Decisions

THIRTEENTH EDITION

Williams Haka Bettner
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ACCOUNTINGINFORMATION FOR DECISION MAKING
Chapter1
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The accounting process
Accounting links decision makers with economic
activities ¾ and with the results of their
decisions.
Accounting information
Economic activities
Actions (decisions)
Decision makers
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Types of Accounting Information
Financial
Tax
Managerial
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Information System

• Information Users
• Investors
• Creditors
• Managers
• Owners
• Customers
• Employees
• Regulators -SEC
• -IRS
• -EPA

• Decisions Supported
• Performance evaluations
• Stock investments
• Tax strategies
• Labor relations
• Resource allocations
• Lending decisions
• Borrowing

• Financial Information Provided
• Profitability
• Financial position
• Cash flows

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Basic Functions of an Accounting System

• Interpret and record business transactions.

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Basic Functions of an Accounting System

• Interpret and record business transactions.

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External Users of Accounting Information

• Owners
• Creditors
• Labor unions
• Governmental agencies
• Suppliers
• Customers
• Trade associations
• General public

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Objectives of Financial Reporting
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Objectives of External Financial Reporting

• The primary financial statements.

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Characteristics of Externally Reported Information
A Means to an End
Broader than Financial Statements
Usefulness Enhanced via Explanation
Based on General-Purpose Assumption
Historical in Nature
Results from Inexact and Approximate Measures
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Users of Internal Accounting Information

• Board of directors
• Chief executive officer (CEO)
• Chief financial officer (CFO)
• Vice presidents
• Business unit managers
• Plant managers
• Store managers
• Line supervisors

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Objectives of Management Accounting Information
To help achieve goals and missions
To help evaluate and reward decision makers
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Characteristics of Management Accounting
Information
Timeliness
Identify Decision Maker
A Means to an End
Oriented Toward Future
Measures of Efficiency and Effectiveness
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Integrity of Accounting Information

• Institutional Features
• Generally Accepted Accounting Principles (GAAP)
• Financial Accounting Standards Board
• Securities and Exchange Commission
• Internal Control Structure
• Audits
• Legislation

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Integrity of Accounting Information

• Professional Organizations
• American Institute of Certified Public
  Accountants
• Institute of Management Accountants
• Institute of Internal Auditors
• American Accounting Association

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Integrity of Accounting Information

• Competence, Judgment and Ethical Behavior
• Certified Public Accountants (CPAs)
• Certificate in Management Accounting (CMA)
• Certificate in Internal Auditing (CIA)
• Code of Professional Conduct

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Integrity of Accounting Information

• Careers in Accounting
• Public Accounting
• Management Accounting
• Governmental Accounting
• Accounting Education

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End of Chapter 1