1 / 20

Managerial Accounting

Managerial Accounting. Week One Notes David B. Hamm, MBA, CPA May, 2002. AICPA Classic Definition of Accounting (1941, restated 1953).

lucio
Télécharger la présentation

Managerial Accounting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Managerial Accounting Week One Notes David B. Hamm, MBA, CPA May, 2002

  2. AICPA Classic Definition of Accounting (1941, restated 1953) “Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.

  3. AICPA Definition of Accounting, 1970 “..to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.”

  4. OVC Student Definition of Accounting “Accounting is a set of demented formulas by which instructors find strong voids in a Business major’s mind for academic probation purposes.” --Tim Kelley, 1987

  5. Class definition of Accounting Accounting is the process of: For making Decisions & Informed judgments Identifying, Measuring, & Communicating Economic information about an entity

  6. Users of Accounting Information • Management • Investors • Creditors • Employees / Unions • Government Agencies / Regulatory bodies

  7. Classifications of Accounting • Financial accounting • Managerial accounting / cost accounting • Auditing (public / internal) • Governmental accounting • Income Tax accounting

  8. Professional Certifications • CPA—Certified Public Accountant • CMA—Certified Management Accountant • CIA—Certified Internal Auditor • PA or LPA—Licensed public accountant (old designation still in some states) • EA—Enrolled Agent (IRS designation)

  9. Accounting Standards (U.S.) • Financial Accounting Standards Board (FASB)—key accounting body in U.S. • Has issued over 130 Statements of Financial Accounting Standards (SFAS’s) • Relates to external financial reporting—audited financial statements • Not intended to directly measure the value of a business enterprise • Accounting standards are still evolving

  10. Other major accounting bodies • AICPA—American Institute of CPA’s • IMA—Institute of Management Accountants • AAA—American Accounting Association (academic body) • NSA--National Society of Accountants (primarily small private practice)

  11. DBH Handouts (Part I) • Fundamentals of Double Entry Accounting • Transactions to Financial Statements • Key Financial Statements • Financial Statement Relationships

  12. Ethics & the Accounting Profession • AICPA, IMA, other codes of professional conduct • Key elements of ethical behavior: • Integrity • Objectivity • Independence • Competence

  13. DBH Handouts (Part 1) • Fundamentals of Double-entry Accounting • Transactions to Financial Statements • Financial Statements (major types) • Financial Statement Relationships Pause for handouts

  14. Current Assets • Definition—cash and other assets expected to be used up or otherwise converted to cash through normal operating activities within one accounting cycle (typically one year)

  15. Current Assets (in order of liquidity) • Cash • Marketable Securities • Accounts Receivable, current Notes Receivable • Inventories • Prepaid Expenses

  16. Cash & Marketable Securities • Cash on hand and in demand deposit accounts • Reconcile to bank statements, etc. • Marketable securities generally recorded at original cost or market value, whichever is lower (conservatism) until sold or redeemed

  17. Accounts Receivable • Reported at “Net Realizable Value”— how much can we expect to realize from A/R collection • Allowance for Doubtful Accounts (bad debts)—estimated by a % of sales, aging of account balances, past historical activity

  18. Inventories • Cost of items held for sale or to be used in manufacturing items for sale • Again, measured on balance sheet at original cost or market value, whichever is lower (conservatism) • Cost flow issues—what about common inventories purchased at different prices during a period (next slide)

  19. Inventory Cost Flows • Specific identification • Average cost (weighted average) • FIFO—First in, first out—ending inventories reflect most recent costs • LIFO—Last in, first out—cost of goods sold reflect most recent costs—popular during periods of rising inflation

  20. Prepaid Expenses • Result of accrual accounting—matching costs with period actually incurred vs. when actually paid • Value of costs already paid that have a benefit (“deferred costs”) in a subsequent period • Examples: Rent, insurance premiums

More Related