Managerial Accounting Key Terms
Find out what management accounting is all aboutSimply put, managerial accounting is a process used by an organization's management that allows them to make informed decisions, set goals and attempt to maximize a variety of objectives. These objectives may include attaining greater revenues, increasing customer satisfaction and decreasing costs. Management accounting information is kept within the organization; this is the major difference between financial accounting and managerial accounting.
Since different organizations have different goals, managers will have to apply their general knowledge of managerial accounting key terms to their specific duties in the organization. Having that general knowledge is the basis for all other learning. Consider the following:
1. Managerial accounting solutions depend in large part on understanding how the supply chain functions, from start to finish.
2. Management accounting systems also rely on knowledge of costs. There is a variety of different costs and costing systems to be aware of.
3. The "balanced scorecard" system is being implemented more and more as managers strive to improve customer relations and operational procedures. Managerial accountants should understand this system.
Get managerial accounting information regarding the supply chain
Understand cost-related managerial accounting systemsAt the very least, managers should know what "COGS" stands for: the cost of goods sold. This includes any parts, labor and anything else that goes into making the product and getting it to the buyer. Other key terms to understand about costing include fixed versus variable costs, the cost of overhead, marginal costs and activity-based costing (ABC). Different firms use different methods, so ensure that you know what your company is looking for.
Put cost and management accounting together with the balanced scorecard systemThe balanced scorecard introduces concepts other than the ones that seem to directly impact profit. Customer relationships and internal employee relations strategies have the potential to impact the bottom line, and these concepts are brought into the balanced scorecard system. By thinking of each different aspect of the organization, you may be able to increase customer satisfaction, which will earn your firm more revenue. Also, by implementing employee retention systems, you may reduce turnover and save on training costs.
- Managerial accounting software may help you understand this terminology. By sitting down and using the software, you'll have to apply the basic knowledge you've learned and link it to your specific firm.
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