{"id":42,"date":"2021-01-26T21:52:00","date_gmt":"2021-01-26T21:52:00","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=42"},"modified":"2021-06-21T18:49:08","modified_gmt":"2021-06-21T18:49:08","slug":"introduction-to-managerial-accounting-defined","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/chapter\/introduction-to-managerial-accounting-defined\/","title":{"raw":"Introduction to Managerial Accounting Defined","rendered":"Introduction to Managerial Accounting Defined"},"content":{"raw":"<h2>What you will learn to do: define managerial accounting<\/h2>\r\n<strong>Accounting<\/strong> is the system of recording and keeping track of financial transactions in a business and summarizing this information in reports. These reports provide information to people who are interested in knowing about the financial aspects of a business. The information guides business managers, investors, and creditors in planning and decision making. In fact, accounting is often referred to as \u201cthe language of business\u201d because business people communicate, evaluate performance, and determine value using dollars and amounts generated by the accounting process.\r\n\r\n<strong>Financial accounting<\/strong> provides financial information primarily for external use. By reporting on the financial activities of the organization, financial accounting generates information needed by investors and creditors.\r\n\r\nMost managerial decisions require more detailed information than what is provided by external financial reports. For instance, in their external financial statements, large corporations such as General Electric Company show single amounts on their balance sheets for inventory. However, managers need more detailed information about the cost of each of several hundred products.\r\n\r\n<strong>Managerial accounting<\/strong> helps managers make good decisions. Managerial accounting provides information about the cost of goods and services, whether a product is profitable, and whether to invest in a new business venture and how to budget. It compares actual performance to planned performance and facilitates many other important decisions critical to the success of organizations.\r\n\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=6352515&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=KCyg8-zM9bA&amp;video_target=tpm-plugin-odn3l9tm-KCyg8-zM9bA\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n\r\nYou can view the <a href=\"https:\/\/oerfiles.s3.us-west-2.amazonaws.com\/Managerial+Accounting\/Transcripts\/IntroductionToManagerialAccounting_transcript.txt\" target=\"_blank\" rel=\"noopener\">transcript for \"Introduction to Managerial Accounting\" here (opens in new window)<\/a>.\r\n\r\nWhen you are done with this section, you will be able to:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Define managerial accounting<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Identify business trends that affect managerial accounting<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Compare and contrast managerial and financial accounting<\/li>\r\n<\/ul>\r\n<h3>Learning Activities<\/h3>\r\nThe learning activities for this section include the following:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: What is Managerial Accounting?<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: What is Managerial Accounting?<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Business Trends<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Business Trends<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Managerial v. Financial Accounting<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Managerial v. Financial Accounting<\/li>\r\n<\/ul>","rendered":"<h2>What you will learn to do: define managerial accounting<\/h2>\n<p><strong>Accounting<\/strong> is the system of recording and keeping track of financial transactions in a business and summarizing this information in reports. These reports provide information to people who are interested in knowing about the financial aspects of a business. The information guides business managers, investors, and creditors in planning and decision making. In fact, accounting is often referred to as \u201cthe language of business\u201d because business people communicate, evaluate performance, and determine value using dollars and amounts generated by the accounting process.<\/p>\n<p><strong>Financial accounting<\/strong> provides financial information primarily for external use. By reporting on the financial activities of the organization, financial accounting generates information needed by investors and creditors.<\/p>\n<p>Most managerial decisions require more detailed information than what is provided by external financial reports. For instance, in their external financial statements, large corporations such as General Electric Company show single amounts on their balance sheets for inventory. However, managers need more detailed information about the cost of each of several hundred products.<\/p>\n<p><strong>Managerial accounting<\/strong> helps managers make good decisions. Managerial accounting provides information about the cost of goods and services, whether a product is profitable, and whether to invest in a new business venture and how to budget. It compares actual performance to planned performance and facilitates many other important decisions critical to the success of organizations.<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=6352515&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=KCyg8-zM9bA&amp;video_target=tpm-plugin-odn3l9tm-KCyg8-zM9bA\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p>You can view the <a href=\"https:\/\/oerfiles.s3.us-west-2.amazonaws.com\/Managerial+Accounting\/Transcripts\/IntroductionToManagerialAccounting_transcript.txt\" target=\"_blank\" rel=\"noopener\">transcript for &#8220;Introduction to Managerial Accounting&#8221; here (opens in new window)<\/a>.<\/p>\n<p>When you are done with this section, you will be able to:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Define managerial accounting<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Identify business trends that affect managerial accounting<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Compare and contrast managerial and financial accounting<\/li>\n<\/ul>\n<h3>Learning Activities<\/h3>\n<p>The learning activities for this section include the following:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: What is Managerial Accounting?<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: What is Managerial Accounting?<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Business Trends<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Business Trends<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Managerial v. Financial Accounting<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Managerial v. Financial Accounting<\/li>\n<\/ul>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-42\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introduction to Managerial Accounting Defined. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Accounting Principles: A Business Perspective. <strong>Authored by<\/strong>: James Don Edwards, University of Georgia &amp; Roger H. Hermanson, Georgie State University. <strong>Provided by<\/strong>: Endeavour International Corporation. <strong>Project<\/strong>: The Global Text Project. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Principles of Managerial Accounting. <strong>Authored by<\/strong>: Christine Jonick. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/ung.edu\/university-press\/books\/managerial-accounting.php\">https:\/\/ung.edu\/university-press\/books\/managerial-accounting.php<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Introduction to Managerial Accounting. <strong>Authored by<\/strong>: Education Unlocked. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/KCyg8-zM9bA\">https:\/\/youtu.be\/KCyg8-zM9bA<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Managerial Accounting Defined\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Accounting Principles: A Business Perspective\",\"author\":\"James Don Edwards, University of Georgia & Roger H. 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