Prepare a paper in which you differentiate between managerial and financial accounting. Be sure to address the following questions:
1. What type of information does managerial accounting provide?
2. What type of information does financial accounting provide?
3. Who are the users of managerial and financial accounting, and what kind of business decisions would they make with this information?
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Managerial or cost accounting is an internal function which allows management and operations people to judge the efficiency and effectiveness of their departments or operations. Although often associated with manufacturing or process costing, cost accounting can be used in most any business.
The real benefits of cost accounting are cost savings. It is impossible to evaluate costs without the detailed information about the nature and classification of the costs. The job of the cost accountant is to categorize costs by some internal reporting process which will provide managerial information to judge internal functions. It is a process which subdivides total costs by function, process or department. In this view, cost accounting is a detailed breakdown of total costs into categories which are important or necessary for a company to understand and evaluate itself.
Management accounting: cost accounting -- a branch of accounting dealing with the classification, recording, allocation, summarization and reporting of current and prospective costs and analyzing their behaviors. Cost accounting is frequently used to facilitate internal decision making and provides tools with which management can appraise performance and control costs of doing ...
The 739-word cited solution presents a comprehensive response to each of the questions about the types and uses of information produced in managerial versus financial accounting. Included is a six point listing summarizing the major differences in uses of financial and management accounting.