Accounting Discipline Overview

1. Accounting Discipline Overview • Today, most accounting professionals take the perspective that cost information is part of the information collected to make management decisions; therefore the distinction between the two is not clear-cut . Dr . Mohamed Mousa

2. Major Differences Between Management and Financial Accounting Dr . Mohamed Mousa

3. Strategic Decisions and the Management Accountant : • Strategy specifies how an organization matches its own capabilities with the opportunities in the market place. • There are two broad strategies : cost leadership and product differentiation • Strategic cost management describes cost management that specifically focuses on strategic issues. Dr . Mohamed Mousa

4. Strategic Decisions and the Management Accountant: • Management accounting information helps managers formulate strategy by answering questions such as the following: • Who are our most important customers and what critical capability do we have to be competitive and deliver value to our customers? Dr . Mohamed Mousa

5. Strategic Decisions and the Management Accountant: • What is the bargaining power of our customers? • What is the bargaining power of our suppliers? • What substitute products exist in the market place and how do they differ from our product in terms of features, price, cost and quality? • Will adequate cash be available to fund the strategy, or will additional funds need to be raised? Dr . Mohamed Mousa

6. Managerial accounting Function : managerial accounting helps managers perform three vital activities- planning, controlling, and decision making. Planning involves establishing goals and specifying how to achieve them. Controlling involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change. Decision making involves selecting a course of action from competing alternatives. Now let’s take a closer look at these three pillars of managerial accounting. Dr . Mohamed Mousa

7. managerial accounting Function : 1-Planning : Plans are often accompanied by a budget. A budget is a detailed plan for the future that is usually expressed in formal quantitative terms. 2- Controlling : This process would involve gathering, evaluating, and responding to feedback to ensure that this year’s recruiting process meets expectations. Dr . Mohamed Mousa

8. Managerial accounting Function : 3-Decision Making : the most basic managerial skill is the ability to make intelligent, data-driven decisions. many of those decisions revolve around the following three questions. What should we be selling? Who should we be serving? How should we execute? Dr . Mohamed Mousa

9. Value-chain and Supply-Chain Analysis and Key Success Factors: • Creating value is an important part of planning and implementing strategy. • Value is the usefulness a customer gains from a company’s product or service. The entire customer experience determines the value a customer derives from a product. Dr . Mohamed Mousa

10. Value-chain and Supply-Chain Analysis and Key Success Factors : The value chain is the sequence of business functions by which a product is made progressively more useful to customers. The value chain consists of : • Research & Development. • Design of Products and Processes. • Production. • Marketing (including Sales). • Distribution. • Customer Service. Dr . Mohamed Mousa

11. The Value Chain Illustrated : Different Parts of the Value Chain : Dr . Mohamed Mousa

12. Decision-making, Planning and Control: The Five-step Decision-making Process : • Identify the problem / uncertainties . • Obtain information . • Make predictions about the future . • Make decisions by choosing among alternatives . • Implement the decision, evaluate performance and learn. Dr . Mohamed Mousa

13. Planning and Control Systems: • Planning consists of : • selecting an organization’s goals and strategies • predicting results under various alternative ways of achieving those goals • deciding how to attain the desired goals. • communicating the goals and how to achieve them to the entire organization. Dr . Mohamed Mousa

14. Planning and Control Systems: Management accountants serve as business partners in these planning activities because they understand the key success factors and what creates value. Dr . Mohamed Mousa

15. Planning and Control Systems • Control : • taking actions that implement the planning decisions • evaluating past performance. • providing feedback and learning to help future decision making. Dr . Mohamed Mousa

16. Management Accounting Guidelines Three guidelines help management accountants provide the most value to the strategic and operational decision-making of their companies: • The Cost-benefit approach compares the benefits of an action/purchase to the costs. Generally, of course, the benefits should exceed the costs. Dr . Mohamed Mousa

17. Management Accounting Guidelines 2. Behavioral and technical considerations recognize, among other things, that management is primarily a human activity that should focus on encouraging individuals to do their jobs better. 3. Managers use alternative ways to compare costs in different decision-making situations because there are different costs for different purposes. Dr . Mohamed Mousa

18. The Next Lecture Chapter 2 “An Introduction to Cost Terms and Purposes “ Dr . Mohamed Mousa