On Thursday was my first class in Managerial Accounting. To say that it was OK would be underestimating it. I actually liked it a lot. There were a few factors that contributed to my favorable impression of the class:
- Professor was very sharp and knowledgable. He looks probably younger than he really is, but he is very good about explaining the material and keeping it fresh. He reminded me my professor in Financial Accounting-II. The edge he has over her is that he is not pushing it too fast, so I am able to follow.
- Professor made a few comments in introduction of Managerial Accounting and what was diffirent about it from Financial Accounting that were hitting very close to home for me. First, he stated that Managerial Accounting is not Financial Accounting, and he wanted us to forget everything we had learned in that class. I guess those who teach Financial Accounting want us never to have to learn Managerial Accounting ;-). You don’t have to ask me twice to forget some of the moments of that course, so I got right on board with that
. Second, when he said we would not have to do debits and credits, there was a sigh of relief in the auditorium. Or was it just me? - The concepts and the subject the Managerial Accounting deals with are familiar to me from Microeconomics and Decision Making courses that I took in fall and loved quite a bit: oportunity cost, fixed and variable costs, sunk costs, incentives, etc.
- The course is based on solving cases that are quite realistic and interesting, if not to say anecdotal. Theye are realistic situations that business managers face in their everyday dealings, including the human factor, not just dry and impersonal lines on the financial statements.
All the positive things above are not to say that it is going to be an easy class, especially for me. But I am genuinely interested in it and that is very important and helpful.
The first half of the class professor made introduction to Managerial Accounting, revealing all those points mentioned above and more. The second half we were going through the solution to the case which was our home assignment for the first class.
The main point of the solution was to show that everything may not be what it seems when you just look at the line on the statement and try to figure out the best course of action from the unsexy numbers provided in the accounting journal. Managerial accounting in my eyes is a way to reconcile, or may be even redeem, those numbers and make them relevant to real life business situations, by integrating them with engineering, marketing, production, human, administrative, and other aspects of business.
Another way to look at it, as was presented in the introductory part of the class, is to remember that Financial Accounting is for external purposes. A sort of “show and tell” directed at outsiders. The Managerial Accounting is for internal purposes, when you use accounting numbers as only one of the many ingredients in making practical decision in real business situations.
We will have to work on a number of cases in groups. The next case is due next class. We already formed our study group of five people. I knew only one person from the fall term in the group. The rest are new for me. A plus is that two group mates are in Accounting Masters program. Hope it will help us all.
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