Financial versus Managerial Accounting
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Financial versus Managerial Accounting
1) What is your opinion on the questions below?
It is time to explore the differences between financial and managerial accounting. Financial accounting is rule-oriented since the information is used to communicate with third parties. Managerial accounting, on the other hand is for internal use. Anything goes as long as the information is a valuable tool for decision making purposes and the benefit of the information exceeds the cost of accumulating and analyzing it.
In addition, we're moving towards understanding the basic concepts of managerial accounting.
References:
Accounting for Management. (n.d.). Difference between Financial and Managerial Accounting. Retrieved from
http://www.accountingformanagement.com/financial_accounting_vs_managerial_accounting.htm
Principlesofaccounting.com. (n.d.). Chapter 17 Multiple Choice Questions. Retrieved from http://www.principlesofaccounting.com/questions%20-%20%20multiple%20choice/chapter%2017%20-%20multiple%20choice.htm
Unknown. (n.d.). The Role of Management Accounting in the Organization. Retrieved from https://docs.google.com/viewer?a=v&q=cache:MWZE_XMqFOUJ:www.swlearning.com/accounting/albrecht/management_2e/expanded/exp_01.doc+Financial+versus+managerial+accounting%3F&hl=en&gl=us&pid=bl&srcid=ADGEESjWheQRI7nzm3i5Zmwsd3la9aWDQDy9N3RbBWiQns9ic71gNJoRxVa75E4KWSi0GthsbXrfNpSEQ_UZvr0QenNE-Ut6XU_9v6Yda0SVULodDfzIGRSb8Pf30b9I3qN0lWmUoXzZ&sig=AHIEtbRDmHJSiuRsS9v6FrbERAz9cqTPEw
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Below are some questions for discussion.
How is the purpose of managerial accounting different from financial accounting?
Are more accountants involved in the financial or managerial function today?
Comment on the use of a functional versus absorption income statement. Describe the differences in presentation and use of each type of income statement.
How is the concept of cost of goods sold different than contribution margin?
Explain the contribution margin concept/computation and when to use the information.
Choose one or two relevant aspects for further investigation and share your knowledge with the class. Try to add information not previously discussed by others. Please, provide factual information (not merely opinions) backed up by details or examples. Your comments should be in your own words and Include references in APA format.
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Solution Summary
This solution answers each of the financial and managerial questions presented in detail. All formulas and calculations are included and each area is addressed.
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1) What is your opinion on the questions below?
How is the purpose of managerial accounting different from financial accounting?
The focus and intended user of each type of accounting is different. In managerial accounting, the intend users are management and other internal stakeholders. Managerial accounting includes both financial and non-financial information. The information is then used for decision-making purposes. The main users of financial accounting information include external and internal users. All stakeholders are provided with information that can be used in decision making. Financial statements contain financial information. The only non-financial information that is included would be found in any necessary disclosures or footnotes as required by GAAP.
Financial accounting must follow Generally Accepted Accounting Principles (GAAP) or another recognized set of accounting principles based upon the location and regulation (IFRS is an example, as opposed to GAAP). Managerial accounting information does not follow a formal set of accounting principles.
Are more accountants involved in the financial or managerial function today?
This would be difficult to answer in any accurate manner. The two disciplines of accounting as so different in most respects. Financial accounting and managerial accounting are both prominent. Managerial accounting includes most of the accountants in major corporations, and the managerial accountants in the smaller businesses that are producing reports with financial and non-financial information not in compliance with GAAP or for use by third parties. Many large companies have enormous managerial accounting departments.
Financial accountants encompass the disciplines of CPA firms, income tax preparation, auditing, and other related accounting areas. These are the companies that work with public companies and that audit financial statements as required by the SEC. Companies must therefore also employ financial ...
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