(BQ) Part 2 book "Accounting" has contents: Managerial accounting and cost – volume – profit relationships; cost accounting and reporting; cost planning, cost control, costs for decision making. | 12 Managerial Accounting and Cost–Volume–Profit Relationships You have learned in Part 1 of Accounting: What the Numbers Mean that financial accounting refers to the process that results in the preparation of the financial statements for an entity. These are oriented to the external user who is not in a position to be aware of the day-to-day financial and operating activities of the entity. In Part 2 of the book, you will learn about accounting for managers of the entity, which will provide yet additional insight to the phrase “what the numbers mean.” When asked by the marketing or production manager what a certain item or activity costs, the management accountant who responds “Why do you want to know?” is not being disrespectful. Costs used for assigning a value to the inventory produced are different from the costs that should be considered when analyzing a modification to the product or a potential new product. In managerial accounting, sometimes called management accounting, economic and financial information is used to plan and control many activities of the entity and to support the management decision-making process. Managerial accounting has an internal orientation, as opposed to the primarily external orientation of financial accounting. The transactions generated by the accounting information system and used for financial reporting also are used in managerial accounting; but the latter are more likely to have a future orientation, such as in the preparation of budgets or decision making. As with financial accounting, managerial accounting has special terminology or, as many would say, jargon. Most of these terms relate to different types of costs. An important early lesson about managerial accounting is that there are different costs for different purposes. In this chapter we will look briefly at the management process, identify several contributions that management accounting makes to that process, and then introduce a model for .
