Why more accounting?


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:

  • Tell who are the main users of financial accounting information;
  • Explain why financial accounting information is important;
  • Tell what the characteristics of financial accounting information are;
  • Explain why financial accounting cannot do everything or serve everyone;
  • Tell who the main users of management accounting information are;
  • Explain why management accounting is important;
  • Tell what the characteristics of management accounting information are;
  • Explain how management accounting differs from and complements financial accounting.

You will also learn about some tools available in Excel. At this end of this introductory chapter, you should also be able to:

  • Join two tables using the function VLOOKUP();
  • Join two tables using the functions INDEX() and MATCH();
  • Format and name a table;
  • Create and manipulate a pivot table;
  • Create a pivot chart.


References

Bhimani, A., Horngren, C. T., Datar, S. M., & Rajan, M. (2019). Management and Cost Accounting (7th ed.). Harlow, UK: Pearson.