Introduction to Accounting Preparing for a User’s Perspective What is the management cycle and how does accounting facilitate it? Debits and Credits Trainer By Kevin C. Kimball, CPA with support from www.canvas.net Free Jan. 2014 Available on the Google Play Store

Discuss & Implement Solutions Identify problems Objectives Make suggestions Give input Organization Discuss & Implement Solutions Leaders Management Cycle

Plan Decide Direct Objectives Improve Control

Plan Objectives Leaders Management Plans

Objectives plans Management Raise our value $1 B. Shareholders Board of Directors

“A goal without a plan is just a wish” Antoine de Saint-Exupéry.

Effective Efficient Objectives Plans Direct

North American Operations FedEx Supply Chain Services, Inc. Manager North American Operations FedEx Supply Chain Services, Inc. Effective: Delivered in one day. Efficient: Used appropriate amount of resources.

Collect in < 30 days Credit policies Credit application Review of financial statements Credit worthiness Ability to pay Willingness to pay Credit limits Already? Time to pay. Collect in < 30 days

Actual Plan Control

We need to call the doctor. Hmmm. This should be 98.6 F.

Management by Exception Actual Budget Variance $1,600 $1,000 $600 Rent What happened here? Management by Exception

Actual Budget Variance Variance % $1,600 $1,000 $600 60% Rent Salaries $20,600 $21,000 (400) (1.9%) Water $ 3,100 $ 400 (2,700) 675%

Honey?! Why is our water bill so high this month?

(Net sales revenues – Cost of Goods Sold) / Net sales revenues = Gross Margin % Actual Budget Variance Variance % Year 1 Gross margin % 24% 25% (1%) (4%) Year 2 Gross margin % 29% 25% 4% 16% Year 3 Gross margin % 13% 25% (12%) (48%)

Budgeted GM % Actual GM % Exception Free. No charge. Exception

Management by Exception Objectives What happened here? Management by Exception

Improve

Improve

Plans? Results Alternatives Decide Objectives?

Managerial Accounting Objectives Management Information Plan How it’s developed Decide Direct Objectives Managerial Accounting Improve Control

How does accounting facilitate the management cycle? Plan Decide Direct Objectives Improve Control Past Present Future

Record Identify & Analyze Summarize

Accounting is essential Plan Decide Direct Objectives Improve Control

Shouldn’t we turn on our instruments? Nah. I got this.

Introduction to Accounting Preparing for a User’s Perspective What are managers and what information do managers use to make business decisions? Debits and Credits Trainer By Kevin C. Kimball, CPA with support from www.canvas.net Free Jan. 2014 Available on the Google Play Store