Unit 1: Cost Measurement and Estimation
We begin by examining the differences between financial and managerial accounting. The primary difference pertains to the audience: who will read the reports? Financial accounting information is geared toward external users, while managerial accounting is for internal users. Managerial accounting is integral to making operational and strategic decisions.
In this unit, we examine the manufacturing process and related financial accounting transactions so that you can differentiate between costs assigned to products and costs assigned to a period of time. The flow of costs in accounting mirrors the physical flow of the inventory. For example, a pizza parlor buys the direct materials they put on their pizzas (cheese, tomatoes, and pepperoni). When a customer orders a pizza, the restaurant assembles the direct materials, bakes (work in process), completes a pizza (finished goods), and delivers it to the customer.
Completing this unit should take you approximately 5 hours.
1.1: Financial Accounting vs. Managerial Accounting
1.2: Merchandisers and Manufacturers
1.3: Key Finance and Management Accounting Personnel
1.4: Ethical Issues Facing the Accounting Industry
1.5: Computerized Accounting Systems
1.6: Cost Terminology
1.7: How Product Costs Flow through Accounts
1.8: Income Statements for Manufacturing Companies
1.9: Basic Math Review
Unit 1 Assessment
Unit 1 Conclusion
Unit 1 introduced you to the basics of managerial accounting. You explored the functions managerial accounting provides and the types of people and organizational structures that support effective management information systems. You saw the difference between financial and management accounting. In the next unit, we will begin to focus on the real-world applications of managerial accounting.