Accounting Information and Managerial Decisions

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Chapter 1

• Accounting Information and Managerial Decisions

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Introduction
DATA- Financial Statements, customer lists,
inventory records, number and type of products or
services sold. INFORMATION - Data that have
been organized, processed, and summarized. KNOWLE
DGE Information that is shared and exploited so
that it adds value to an organization.
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Introduction
DATA become INFORMATION when organized,
processed, and summarized, and information
becomes KNOWLEDGE when it is shared and exploited
to add value to an organization.
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Accounting Information
Accounting information includes both financial
and nonfinancial information used by decision
makers.
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Users of Accounting Information
Financial Accounting
Managerial Accounting
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Users of Accounting Information
The three primary activities of managers are
planning, operating and controlling
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The Role of the Managerial Accountant
Managerial accountants facilitate management
decision making.
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The Information Needs of Internal and External
Users

• Internal Users
• More flexible
• May be geared toward specific segments of a
  company
• May be customized, less precise, and uses
  estimates frequently

• External Users
• Less flexible
• Geared toward reports on company as a whole
• Must meet requirements of SEC, GAAP, IRS

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A Decision-Making Model
Never make decisions with just the
numbers! Always consider nonnumerical
(qualitative) information.
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Enterprise Risk Management

• Every business faces risk and uncertainty
• Risk is often thought of in negative terms, but
  risk can provide opportunities
• Businesses must identify and effectively manage
  risks