Question about Functions of Managerial accounting
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Operations deals with how the company is performing. Operations may be refined into different manufacturing processes such as design, materials procurement, assembly, testing and so on.
A VP of operations has asked you to make a presentation at the weekly status meeting on how to improve the efficiency and effectiveness of each manufacturing sub processes individually and as a whole.
She states that to drive performance, you will need to examine accounting-based data on material, labor, and overhead costs. These types of information are not disclosed in financial reports for lenders and owners. Rather cost information relates to how to operate now and moving forward. External reports are more backward-looking about how an entity DID operate. While there will be a strong relation between operation profits and profit per the external financial statements, the way that profitability is measured can vary greatly especially since profits on an external financial report are defined according to strict definitions. Nevertheless, the VP of operations finds the relation between operation profits and profit per the external financial statements most useful. You are to present your findings and recommendation at this meeting.
Describe the functions of managerial accounting and the external uses of accounting.
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Solution Summary
This explains the functions of managerial accounting and the external uses of accounting
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External uses of accounting mainly by Financial accounting
Financial accounting is a process of recording, summarizing, analyzing and interpreting the financial transaction of an organization. It mainly involves preparation of the financial statements and starts from journal ends with making of income statement and balance sheet. These statements are statutory compulsory to prepare for the organization. It mainly involves serving the external parties such as government, investors, lenders etc. of an organization. It serves as a base for the management accounting reports. These statements have to be periodically prepared as per the statutory prescription. Therefore a financial accountant's job is primarily to record the business transactions, prepare financial ...
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