1. Accounting Information and Managerial Decisions
Chapter 1
Accounting Information and Managerial Decisions

2. Introduction
DATA- Financial Statements, customer lists, inventory records, number and type of products or services sold.
INFORMATION - Data that have been organized, processed, and summarized.
KNOWLEDGE – Information that is shared and exploited so that it adds value to an organization.

3. Introduction
DATA become INFORMATION when organized, processed, and summarized, and information becomes KNOWLEDGE when it is shared and exploited to add value to an organization.

4. Accounting Information
Accounting information includes both financial and nonfinancial information used by decision makers.

5. Users of Accounting Information
Financial Accounting
Managerial Accounting
External
Stockholders
Potential Investors
Creditors
Government Agencies
Suppliers
Customers
Internal
Employees
Employee Teams
Departments
Regions
Top Management

6. Users of Accounting Information
The three primary activities of managers are planning, operating and controlling

7. The Role of the Managerial Accountant
Managerial accountants facilitate management decision making.

8. The Information Needs of Internal and External Users
Less flexible
Geared toward reports on company as a whole
Must meet requirements of SEC, GAAP, IRS
Internal Users
More flexible
May be geared toward specific segments of a company
May be customized, less precise, and uses estimates frequently

9. A Decision-Making Model
Never make decisions with just the numbers!
Always consider nonnumerical (qualitative) information.

10. Enterprise Risk Management
Every business faces risk and uncertainty
Risk is often thought of in negative terms, but risk can provide opportunities
Businesses must identify and effectively manage risks