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Business LibreTexts

1.1: Introduction

  • Page ID
    5178
  • Why It Matters

     

     

    Chapter Outline

     

    1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management

    1.2 Distinguish between Financial and Managerial Accounting

    1.3 Explain the Primary Roles and Skills Required of Managerial Accountants

    1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards

    1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting

    A photograph shows a group of people with laptops and notebooks sitting around a large conference table and looking up at someone writing on a board.

    Figure 1.1 Business Honor Society Student Meeting. (credit: modification of “Group of People Sitting Near Table” by Christina Morillo/Pexels, Pexels license / Public Domain)

    You have been elected as the coordinator of committees for your school’s business honor society. In essence, this makes you the manager of all the committees. This is a new position that was created because the committees have never been evaluated for their effectiveness within the organization. Your job in this position is to ensure that the committees—such as recruiting, fundraising, community service, professional activities, and regional and national conference presentations—are operating within the goals put forth in the society’s mission statements, as well as to assess the effectiveness and efficiency of each committee in meeting the organization’s goals. Your starting point is to understand the overriding mission—the strategic direction and purpose—of the society. Next, you want to understand how each committee fits into the strategic goal of the society and then identify the separate goals of each committee. Once you understand the purpose and goal of each committee, it will be necessary to know how each committee is going about meeting its goals. Last, you will evaluate each committee to see if the goals are being met.

    Notice that in performing your role as the coordinator of committees, you will need financial information, such as budgets and financial statements, along with other nonfinancial information, for example, the society’s mission statement, each committee’s strategy statement, and records of their activities and meetings. To help assess how well the honor society and its committees are meeting their goals, you need more information than can be obtained from simply looking at the various financial documents assembled by each committee within the organization. The same is true in any business organization. Managers and other internal decision makers need more information than is available in the basic financial statements: they need information generated by the managerial accounting system.