Managerial Accounting in Mining

The overall discipline of accounting is generally divided into two distinct sub-disciplines: financial accounting and managerial accounting. While the two are similar in that they both generate and use financial information, they do so in different ways and for different purposes.

A major difference between financial accounting and managerial accounting relates to the flexibility with which the financial information is generated and presented. Financial accounting must follow accepted accounting standards. The information is then available to individuals outside the organization and can be audited.

Managerial accounting uses a decision-usefulness criterion and is oriented to the future. The information is prepared for, and used by, internal management. In fact, many companies would consider much of the information generated by the managerial accounting system to be proprietary and would definitely not wish it to be available to individuals outside the organization. It often relates to existing or attainable competitive advantages and is highly confidential.

This course covers how managerial accounting can be used to help managers make decisions in the planning phase of the business cycle, within a mining context, and addresses the following topics.

• step-by-step examples of how to create a master budget, pro forma balance sheet, and pro forma income statement
• examples of relevant costing analyses to support decision-making in specific situations
• capital budgeting analyses of cash inflows and outflows
• discounted cash flow methods: net present value, internal rate of return
• accounting-based methods: payback, accounting rate of return

Authors

• Craig Emby

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