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Accounting Cycle Essay

668 words - 3 pages

Introduction to Accounting

Why Study Accounting?

Engineering Accounting

• Accounting is pervasive
• Used in all types of organizations

An Overview
Richard S. Barr

– For-profit companies
– Not-for-profit companies
– Governmental organizations

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Organizations

Accounting

Common characteristics:
• An objective or group of objectives
• A set of strategies to achieve its objectives
• Managers

• A key element of management
• You must understand what is being
reported

• Managers' performance is often
measured by accounting data
• This data is used for decision making

• An organizational structure

• A need for information
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Managerial

• Concerned with the costs of business
activities

• Managerial accounting:
– Focuses on internal uses by management

– Products, services, departments, resources

• Supports decision-making
• Part of managerial accounting

– Emphasizes the future
– Is not governed by generally accepted
accounting principles
– Relevance and flexibility of data
– Less emphasis on precision
– Draws from other disciplines
– Is not mandatory

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THE WORK OF
MANAGEMENT

Financial vs. Managerial
Similarities
• Use the same accounting data
• Rely on concept of responsibility:
– Assigning responsibility to individuals

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The Work of Management



16

Planning

Planning
Organizing and directing
Controlling
Decision-making

• Deciding on objectives and how to
attain them
• In accounting:
– Constructing budgets

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3

Introduction to Accounting

Organizing and Directing

Controlling

• Organizing: deciding how best to
carry out established plans and
objectives
• Directing: overseeing daily activities
and keeping organization running
smoothly

• Implementing plans and using
feedback to obtain objectives
• In accounting:


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Decision Making

Types of Decisions

• Choosing between alternatives
• Example internal decision makers:














Division Manager
Plant Manager
Foreman
Marketing Manager
Regional and District Sales Manager
Manager of Research and Development
Manager of Physical Distribution

Make or buy a product
Choose raw material to use
Select process to use
Acquire or discard machinery or equipment
Add or delete a product or product line
Select products for...

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