An Introduction to Managerial Accounting and Cost Concepts

1-1

Chapter 1

An Introduction to Managerial Accounting and Cost Concepts

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

Objectives
1. Comparison of Financial and Managerial 2. 3. 4. 5. 6. 7. 8.

Accounting. General Cost Classifications. Product Cost versus Period Cost. Cost Classifications on Financial Statements. Cost Classifications for Predicting Cost Behavior. Cost Classification for Assigning Costs to Cost Objectives. Cost Classification for Decision Making. Review Problems
MSc. Mohammad Hicham Khalil

Introduction to Managerial Accounting

1-2

Learning Objective 1

Comparison of Financial and Managerial Accounting

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

Comparison of Financial and Managerial Accounting
Managerial Accounting: is concerned with providing information to p g managers (people inside an organization) who direct and control its operations. Financial Accounting: is concerned with providing information to stockholders, creditors and other who are outside an organization.

Introduction to Managerial Accounting

MSc. Mohammad Hicham Khalil

1-3

Comparison of Financial and Managerial Accounting
Financial Accounting
1. Users 2. Time focus 3. Verifiability versus relevance 4. Precision versus timeliness 5. 5 Subject 6. GAAP 7. Requirement External persons who make financial decisions Historical perspective Emphasis on verifiability Emphasis on precision Primary focus is on the whole organization Must follow GAAP and prescribed formats Mandatory for external reports

Managerial Accounting
Managers who plan for and control an organization Future emphasis Emphasis on relevance for planning and control Emphasis on timeliness Focuses on segments of an organization Need not follow GAAP or any prescribed format Not Mandatory
MSc. Mohammad Hicham Khalil

Introduction to Managerial Accounting

Learning Objective 2

General Cost Classifications

Introduction