Acc 206 Week 4 Understanding Managerial Accounting

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Understanding Managerial Accounting RWS ACC 206 Prof. Tolley September 3, 2012 Understanding Managerial Accounting Understanding how to build a successful business requires more than accountants crunching numbers as they account for all the transactions for a given period. It even requires more than accountants creating balance sheets, income statements, and statements of owner’s equity i.e., the financial statements. It also requires teamwork between the accountants and the department managers. It is doubtful that success will come to a company without assistance from the management team. While each department manager oversees a different part of their company’s business, usually they all have one thing in common: they play a part…show more content…
Just as it takes a village to raise a child, it takes a management team working with the accountants to pave the way for a company’s prosperity. Horngren, Harrison, and Oliver (2012) describe managerial accounting as a method that centers on “the accounting tools managers use to run a business” (p. 773). With that comes management accountability. Company managers have a responsibility to oversee and manage the resources of that company (p. 794). “Linking authority for control with responsibility for the results thereof is an approach that has proved effective in many phases of business” (Kabbes, 1964). That statement rings as true today as it did in 1964. While our methods have advanced and become more streamlined with computerized systems, the principles behind management accounting remain the same. As stated by Kabbes (1964), “Organization of an accounting system around responsibility centers follows this approach and is the genesis of . . . management control device known as responsibility accounting.” Today responsibility accounting is known as managerial accounting, a gathering of information for internal users. Simply put, managerial accounting is a process that gathers information from sources such as operations, customers, competitors, suppliers, and finance to help managers control operations and make plans that can drive them closer to achieving their company…show more content…
As stated by Geiger (1998), “The language of management is money for good reason. Management decision-making is unlikely to be very good in the absence of credible, relevant cost measurements” (p. 51). Without any ability to gauge where the strengths and weaknesses lie, a company is working in the dark. Geiger (1998) further stated, “It is the essence of managerial costing systems to show what things cost in ways that affect resource consumption. Management develops and maintains managerial costing measurement processes to learn something about its costs” (p. 52). In other words, a way to gauge those strengths and weaknesses, allowing the company to capitalize on the strengths and gain control of its weaknesses. Geiger (1998) explained that the insight gained into the costing of projects, products, and processes is the measurement goal of learning and the underlying purpose is mission support (p. 49). By developing this information, a company can more effectively manage its resources and be in a position for

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