This post addresses financial & managerial accounting issues
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Briefly discuss the main difference between Financial Accounting and Managerial Accounting? Are there any crossovers that might make the research for one assist in the finding information for the other? Discuss the difference between direct costs and indirect costs? Is the line so bright between the two. Provide experiences in your day to day life that might be similar to the definition of direct cost and indirect cost.
Define the difference between relevant cost and irrelevant cost. Provide a day to day situation where you are required to make decisions on the relevancy of a cost or irrelevancy of a cost. After you have characterized a cost as irrelevant, is it really irrelevant, or are there external/internal factors that might be influencing your decision?
Describe why an investor would want to know the Present Value of an investment. How does Net Present Value differ from Internal Rate of Return. Provide a situation in your day to day life where one might use these two investment stratagems (day to day means not investments, business or private).
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This solution discusses the following questions: (All questions are thoroughly answered.)
1.Briefly discuss the main difference between Financial Accounting and Managerial Accounting? Are there any crossovers that might make the research for one assist in the finding information for the other? Discuss the difference between direct costs and indirect costs? Is the line so bright between the two. Provide experiences in your day to day life that might be similar to the definition of direct cost and indirect cost.
2. Define the difference between relevant cost and irrelevant cost. Provide a day to day situation where you are required to make decisions on the relevancy of a cost or irrelevancy of a cost. After you have characterized a cost as irrelevant, is it really irrelevant, or are there external/internal factors that might be influencing your decision?
3. Describe why an investor would want to know the Present Value of an investment. How does Net Present Value differ from Internal Rate of Return. Provide a situation in your day to day life where one might use these two investment stratagems (day to day means not investments, business or private).
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The main difference between financial and managerial accounting is that financial accounting relies on past information; it is entirely based on what happened in a specific accounting period, whether it's the month or year, and managerial accounting takes into account future information. Managerial accounting is not strictly numbers based as financial accounting is, and managerial accounting takes more data, analyses, and information about current and future conditions, and then makes that information useful to it's users.
There is a definite crossover of information that makes research for one assist in finding information for the other, and this is particularly true with information from financial accounting being used in managerial accounting. We wouldn't really see the opposite. Financial accounting is based on the accounting transactions and what took place, but managerial accounting would have a crossover of information from financial accounting to use as the support for the managerial accounting data, analyses, and forecasts.
A direct cost can be tied directly to the product. Materials, supplies to make the product, and direct labor (labor used for manufacturing of the goods) are examples of direct costs. Indirect costs can't be directly tied to a product. Expenses like janitorial services, maintenance of the factory in general, outside consultants hired to improve the overall manufacturing process or to improve quality of all the products as a group, advertising for the company and not one specific product are all indirect costs. The line isn't always bright between the two. It can take investigation and a lot of determination to decide if a cost is direct or indirect. If I hire a consultant to overview the entire manufacturing process to improve efficiency, and the consultant then decides that all of the problems ...
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