Bhimani, Horngren, Datar, & Rajan (2019) give the following definition of accounting:
An accounting system is a formal mechanism for gathering, organizing, and communicating information about an organization’s activities.
Management accounting shares this definition with financial accounting. Therefore, in this course, you will also learn how to gather, organize and communicate information about an organization’s activities. This naturally brings some perfectly legitimate questions: why another accounting course? And why “management accounting” instead of “intermediary” or “advanced” financial accounting? Does the adjective “management” rather than “financial” really changes what it is? The short answers to these questions are “because they serve different purposes”, “because they serve different users” and “yes, it changes everything”…
This chapter will give you the long answers to these questions. One common definition can refer to very different realities. For instance, a school and a hospital share the definition of a “building”, but are very different buildings. The same holds for financial accounting and management accounting. At the end of this introductory chapter, you should be able to:
You will also learn about some tools available in Excel. At this end of this introductory chapter, you should also be able to:
Bhimani, A., Horngren, C. T., Datar, S. M., & Rajan, M. (2019). Management and Cost Accounting (7th ed.). Harlow, UK: Pearson.