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1. How relevant is managerial accounting for a firm's decision making process? 2. Is managerial...

Question:

1. How relevant is managerial accounting for a firm's decision making process?

2. Is managerial accounting more than just estimating a cost for the financial accounting systems of a firm?

3. Does managerial accounting systems have an impact on the value of a firm? If so, how?

Managerial Accounting

Managerial Accounting is the accounting focused on the internal workings of a business. There is no formal reporting requirement for managerial accounting, and GAAP does not need to be followed. Managerial accounting provides information about the business to management, to make effective decisions based off the information.

Answer and Explanation:

1. How relevant is managerial accounting for a firm's decision making process?

Managerial accounting is critical to the decisions made by a business. Managerial accounting provides the information for the business to make decisions, based on internal metrics, such as the average cost of an activity.

2. Is managerial accounting more than just estimating a cost for the financial accounting systems of a firm?

Absolutely. Managerial accounting provides all of the internal business information, and allows for management to use that to make decision based on it.

3. Does managerial accounting systems have an impact on the value of a firm? If so, how?

Yes it does. The managerial accounting systems allow management to evaluate costs and other activities, and thus maximize their profits based on the available information. Thus, it has a direct impact on the value of a firm.


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Managerial Accounting Functions

from Business Management: Help & Review

Chapter 9 / Lesson 1
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