Assignment: Managerial accounting emphasizes short-term profit analysis, so the income statement is very important. Consequently, we’ll examine and discuss income statements in this first case. The assignment for this module is divided into two parts:
Use the background material and Internet to answer the questions below.
Discuss and analyze the difference between managerial and financial accounting. Pay particular attention to:
• How is managerial accounting different from financial accounting?
• Comment on the different needs and use of financial information for internal purposes.
• The managerial accounting profession and its role in today’s business environment. How has it changed over time?
• Comment on the Certified Management Accountant (CMA) designation. How is it different from the CPA certification?
• Explain the main differences between the absorption and contribution (behavioral, variable) income statements. Will net income always be the same under the two approaches? If not, explain the difference.
• Comment specifically on why companies feel the need to create yet another income statement in a different format. What information can the company gleam from this approach which is helpful as a tool in the decision making process.
• Explain situations in which break-even analysis can be a useful tool. Explain the break-even formula and provide a specific example using numbers for a product with which you are familiar. Reasonable estimates are adequate. Don’t forget to include the source of the information.
It is important to answer the questions as posed. The discussion should be three to five pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.
References to use:
Agrawal, N. K. (2010). Principles of Management Accounting, Global Media (read chapters 1, 5, and 6), from library.
Martin, J.R. (n.d.) Management Accounting: Concepts, Techniques, and Controversial Issues – Chapter 1: Introduction. Management And Accounting Web Home Page. Retrieved fromhttps://maaw.info/Chapter1.htm
Madegowda, J. (2007). Management Accounting, Global Media (read chapters 1 and 8), from library.
Introduction to Managerial Accounting (2007, July 25) [Video File]. Retrieved fromhttps://www.youtube.com/watch?v=pBCRmjnwWgo
Read one of the following:
Walther, L.M. (2011). Principles of Accounting: A Complete Online Text, chapter 23 (the section titled Variable costing versus absorption costing) and chapter 18. Retrieved fromhttps://www.principlesofaccounting.com/
Hermanson, R.H., Edwards, J.D., & Invacevich, S.D. (2011). Accounting Principles: A Business Perspective. First Global Text Edition, Volume 2 Managerial Accounting, 73-87.https://textbookequity.com/oct/Textbooks/TBQ_PA_Accounting_managerial.pdf
Accounting for Management (n.d.). Managerial or Management or Cost Accounting Terms and Definitions. Retrieved fromhttps://www.accountingformanagement.com/managerial_accounting_defintions.html