 We've spent many weeks learning about financial accounting and focusing on some specific assets. But let's take a step back and summarize financial accounting and how we use that to transition into managerial accounting. In its most basic form, financial accounting is measuring transactions and communicating that information to external decision makers. We've done a lot of measuring thus far. We've learned how to analyze transactions, how to journalize transactions, how to analyze accounts and make adjustments and specifically, how to measure and report information about cash, inventory, receivables, and plant assets. Of course, the way financial accountants communicate information to a company is through the standardized financial statements, including the income statement and the balance sheet. Because financial data is communicated externally and used by investors and creditors to make decisions and comparisons about companies, the data must be standardized. Thus, financial accounting must follow gap. Financial accounting also has a secondary purpose and that is internal decision makers like managers and owners use it to make internal decisions about their companies. So I've modified the image to show what managerial accountants do. They use financial statements, other financial data, and even non-financial data to perform analysis and then communicate the results to internal decision makers like managers who use the results to make decisions about a company's strategies, plans, directions, and processes. Managerial accounting analysis doesn't follow a standard set of guidelines like gap because the information isn't communicated outside of the organization. The only real guidelines are that the analysis meets the needs of the internal decision makers. Because of this, both financial and non-financial data might be used to inform and guide decision making. Managerial accountants communicate the analysis to internal decision makers. Although there are no set of standard reports, there are some common managerial accounting reports like job cost records, bill of materials, budgets, variance analysis, and capital budgeting analysis to name a few. Again, the purpose of managerial accounting is to support internal decision making. Some of the common decisions addressed in managerial accounting courses are determining product costs, which we'll learn about in this module, cost forecasts and break-even analysis, which we'll learn about in the following module. You can see some other common decisions that we won't cover in this course, but are often covered in stand-alone managerial accounting courses.