Accounting论文模板 – Managerial Accounting


Financial management is an integral component of management in the present organizations. A lot of operations in the business enterprises are focussed on maximizing profits while minimizing losses as much as possible. As a result, business owners are more concerned with the returns of their businesses and the ways of improving returns for their firms. Financial management, therefore, becomes an important aspect of management for all organizations (Cinquini & Tenucci, 2010). Also, increasing competition in the world market requires firms to invest more in strategies that would accrue more profits, attract more clients and thus compete effectively and satisfactorily in the local, regional and global markets.

To maintain proper performance, Bauman & Shaw (2005) highlight that sufficient and adequate business oriented information must be availed to the managements to make well-informed decisions on the appropriate measures to take to improve business performance.  As a result, different forms of accounting processes have emerged in the recent past to cater for all companies needs and inform decision-making processes in all firms around the globe. Two basic types of accounting practices have dominated and played critical roles in shaping the financial and organizations’ business environments by availing the necessary information required for informing decision making by managements (Financial Accounting Standards Board, 2006). These include managerial accounting and financial accounting

Even though the two types of accounting systems have been used interchangeably in the financial environments (IFAC, 1998), they bear different connotations and the specialists in these areas perform significantly different roles (Horngren, Sundem & Stratton, 2005). This paper provides a vivid illustration of the roles and responsibilities of financial and managerial accountants within a business environment and the importance of information produced by each specialist. Using the case study of a junior league club, the research will explore the various components of the accounting systems that aids to proper financial managements in organizations.

Financial accounting and managerial accounting

In business scenarios, two types of financial reports are often generated. These include management and financial reports, each having significant contributions to the success of the businesses in their unique ways. It is for these reasons that managerial and financial accountings have been treated on most occasions as two sides of the same coin. Both complement and supplement one another in a more direct and complete manner to render the necessary information about finances that managers need to make well-informed decisions about the productivity and profitability of their companies. The main differences between financial accountants and managerial accountants lie in the definition of the two types of accounting professions. In basic terms, Ahrens & Chapman, (1999) observes that financial accountants usually prepare accounting reports that are outside the some business parties such as the creditors, suppliers, the shareholders, customers, investors, and lenders, etc.

In this form of accounting, pure bookkeeping and reporting of the financial data for the company are provided. For these reasons, financial accountants base their derivations on certain basic assumptions and conventional principles that are conservatism, consistent, accrual and historical in nature (Barth, Beaver, & Landsman, 2001). In doing this, financial accountants come up with routine documents such as the balance sheet, cash flow statements, income flows and other related financial documents. These documents are based on the business performance of the companies for a period of the past year (Kaplan & Atkinson, 1998). The information generated by the financial accountants is important for informing decisions made by both internal and external parties to the companies concerned. However, the bulk of information availed by these people is rather routine and regulated to comply with the traditional demands of accounting systems (Langfield-Smith, 2008).

Managerial accountants on the other hands utilize a lot of financial accounting information to generate salient and detailed information that managements use to make insightful and focused decisions (Pistoni & Zoni, 2000). Shields (1998) describes managerial accounting as an accounting system that provides adequate information to the managements of organizations in making business decisions, formulate policies, plan for the future of the businesses and control the business operations to generate maximum profits. Financial accountants champion in the generation of pure quantitative information with facts and figures reflecting the financial status of the companies. As opposed to this, managerial accountants generate both qualitative data and qualitative analyzes of the respective figures produced. In this way, therefore, managerial accountants’ information is not limited to certain facts only as displayed in the financial statements. Rather, they go beyond the facts and figures presented to interpret the information and provide detailed accounts of the representations to each of the information given.

The managerial accountants generate their information by extracting the relevant pieces of information from the financial and cost accounting reports. A lot of the information generated by managerial accountants is used by managers to set their budgets, develop achievable goals and make relevant business decisions that would help to improve the performance of their businesses (Hoffjan & Wömpener, 2005). Managerial accountants dig into the financial details that are required by the managements; thus are management specific. They are more flexible compared to the financial accountants regarding the bulk of the information that they generate. For these reasons, managerial accountants can produce information on a weekly, monthly, or quarterly basis depending on the directives and needs of the management (Fowzia, 2011).

Case study analysis: the junior league club

This section provides a detailed application of managerial accounting information in evaluating the performance and decisions suitable for the case study entity (the junior league club). Different subsections of this section provide an illustration for the specific components of the club’s business operations regarding its present and future business operations.

The club’s sales shop

The sales shop plays a crucial role in contributing to the overall income of the business. The sales shop acts as a store that sells various sports apparel and related assets to the club in question. For these reasons, like another business details, marketing strategies adopted by the retails determines to a great extent to total returns per given period. As Fowzia (2011) highlights marketing strategies adopted by different agencies in the world today need to focus on the international markets apart from the local and regional markets. Online shopping is today, becoming the most lucrative market platforms compared to the traditional shopping systems. As opposed to the traditional shopping mechanisms which require that the clients move to the shop to acquire whatever they need, online shopping platforms need not consider locational advantages.

The choice of an appropriate marketing platform determines the overall success of the shops that provide online services (Jones & Luther, 2004). Besides, Jones & Luther (2004) highlight that investing in an online market expands the market scope for the businesses beyond the mere regional and local markets. Facebook, for instance, has provided a stream of millions of marketing. Moreover, most clients find online shopping easier, cheaper and faster than the traditional shopping mechanisms. This is because shoppers can make their exploration and purchase at the comfort of their offices. Most companies that excel in the modern day business world have taken their stores online to exploit the internet opportunities. By relocating its store to an online platform, the club is likely to boost its shop performance verily hence catch up with its competitors. I would like the, therefore, advice the company to relocate its store online and start providing online services for better returns. This move will not only increase their market opportunities but also income generated from such online platforms (Jones, 1991).

The restaurant

The condition of the restaurant is currently in bad shape, and out-dated thus performs badly. As described in the case study, the restaurant gives less return due to its bad shape. Different companies employee different methods to boost the performance of their businesses. For instance, Innes, Mitchell, & Sinclair (2000) observe that the most common strategy that companies look into to increase the performance of their companies is to improve their marketing strategies. In this case, however, the club owner needs to improve the quality of the structure rather than changing or improving his marketing strategies. In this respect, therefore, the cost of renovating the structures must be relevant to the returns expected from the restaurant. Relevant costing, therefore, becomes the most integral determinant of the costs of renewal for the entire structure. Relevant costing is described by Innes, Mitchell, & Sinclair (2000) to infer the choice for an appropriate cost for a given project depending on the returns expected to be generated from such projects. Ideally, a project is only viable economically if the returns expected from it are higher than the cost of establishing it. The company should use lesser funds to renovate the restaurant than the expected short-term profits expected from it (Atkinson, Banker, Kaplan, & Young, 2001). The principle of profit-making dictates that the expenditure must be lower than the profits accrued from the businesses (Atkinson, Banker, Kaplan, & Young, 2001).

The Bars

According to the case study narration, the bars are noted to be in an outbuilding beside, the roofs leaking. As a result, the club owners have a choice to renovate the bars or pull them down and rebuild new structures. According to Horngren, Foster & Datar, (2003), fixed assets such as buildings need to be improved as their values degrade with time. Particularly, the buildings are renovated or restructured when their net present value (NPV) is reduced below the marginal cost. In such circumstances, the structures are improved or rebuilt to regain their former statuses and accrue more or regain its ormer profit margins. In this case, therefore, Horngren, Foster & Datar, (2003) advises that the management needs to analyze and detail the present value of the bar including the returns and the general cost of the structure in comparison to the cost of rebuilding the new structure.

An extensive evaluation needs to be conducted by the management to compare the expected internal rate of returns that will be accrued from the project when operational after renovation and the IRR when a new building is erected. Horngren, Foster & Datar, (2003) defines the IRR as the total accrued interests from a project that based on the net present value of all cash flows from the project. This includes both the negative and positive cash flows. The IRR has been used in most cases to evaluate and determine the economic viability of various projects for investment (Horngren, Foster & Datar, 2003). Obviously, the IRR for renovated structures is often low in the long run as the developers would be required to spend increasingly high amounts of money to maintain the structures as they continue to wear out. I would, therefore, advice the owner of the club to consider rebuilding the bars as this will reduce the cost of regular maintenance. Besides, the development of the new structure will not only increase the net present value of the project, at least at present but will also increase the project’s internal rate of return in the short term (Kaplan & Atkinson, 1998).

The employees

It is good for the owner of the club to realize that the fundamental initiators and maintenance of the companies’ success over time. Managing the human resources is the primary challenge to the managements of the companies concerns. Employees’ motivation is a critical factor in ensuring that the employees attain job satisfaction. Job satisfaction is defined by Hofstede (2001) as the attitudinal feeling and emotions that the work assigned to them is adequate and meets their liking. Job satisfaction is emotional and needs to be satisfied through motivation. According to Hofstede (2001), two primary motivational strategies have been used by employees in various parts of the world. These include job upgrading and promotions and proper pay. Of this good pay is primarily important as a motivational strategy that employees have used to achieve job satisfaction under various scenarios especially where the employees feel that they are underpaid by the companies for which they work (Hofstede, 2001). Employees’ walkaways are common in situations where they feel unsatisfied with their works and against the compensations from the company. In cases of mass employees’ resignation and transfers, the concerned companies have suffered losses since the new recruits have to adapt to the new values of the organizations. During the period when the newly recruited employees adapt and comply with the values and norms of the new organizations, their productivity is reduced considerably. Based on these observations, I would advise the club owner to compensate their employees adequately and not to render them redundant as this will reduce the organization’s productivity in the short-term.


To conclude, financial accounting activities of the modern companies is a critical factor that many companies must contend with. Financial accounting forms an integral component of management and decision making in organizations. Two types of accounting have been developed to aid in a proper understanding of management operations for profit making. The financial accounting and managerial accounting practices have aided in organizational management by providing adequate information for managers to make better and well-informed business decisions to help in improving their productivity.


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