Managerial accounting term paper

Activity management, or activity based management, places emphasis on continuously improving the activities and tasks, or work that people perform in an organization. The main idea is to find and eliminate waste. Conceptually, activity management is somewhat different from cost management in that it focuses on the waste itself, not the cost of waste. 12 It is a process oriented approach rather than an accounting results oriented approach. Activity management also has a long run, rather than a short run emphasis. Although activity management is part of the cost management system (CMS) advocated by CAM-I, it is important to make a distinction between managing costs (accounting results) and managing activities (processes or work). This distinction is important because placing too much emphasis on costs (or any other short run results oriented measurement) may cause managers to make decisions that reduce costs, but are not in the best interest of the organization's long run performance and competitiveness. A few examples include a manager's decision to reduce research and development, employee training, and preventive maintenance just to improve short term accounting results. This conceptual distinction provides the reason cost management and activity management are presented as separate concepts in Exhibit 1-2.

Management accountants are often confused with financial accountants ; while both provide valuable services to an organization, there are key differences between the two roles. Managerial accounting primarily involves completing tasks and producing reports that inform company leadership about financial decisions related to general company operations. Financial accounting’s central focus is informing external groups – such as banks, boards of directors, stockholders and tax agencies – about the company’s financial status.

Managerial accounting term paper

managerial accounting term paper


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