discussion 2 managerial accounting managerial accounting responsibilities 1
Distinguish between managerial and financial accounting as to (a) primary users of reports, (b) types and frequency of reports, and (c) the content and purpose of reports.
Please respond to the following discussion question. Your response should fully address all elements of the question and be a minimum of 200 to 300 words long
Comment on two student posts in 100 word count
Financial accounting is about the collection of accounting information into the financial statements and managerial accounting talks about the internal processes used to justify for business transactions. The key differences between the two is that financial accounting provides information primarily to users (stockholders, creditors, regulators) outside the company, but is also distributed within the company, while managerial accounting information is focused more internal to the company to aid officers and managers in the decision making process. Financial accounting reporting transpires through the use of financial statements, which are reported quarterly or annually, and is used by external users for general purpose analysis. The financial statements reports on the results of an entire business and must comply with various accounting standards as well as being limited to double entry accounting and cost data (Kimmel, Weygandt, & Kieso, 2016). Managerial accounting provides a more detailed report and is focused on the specifics of what is causing a problem and how to fix them. Managerial accounting is more concerned with operational reports and abide by a different set of accounting rules and procedures utilized by management for internal business analysis; reports are as frequent as possible to address budgets and forecasts to be able to resolve any issues as early as possible.
We have already established that financial accounting is keeping track of the money in the company. The accountant needs to know where the money is going, what money is coming in, and what money is being used for. There are for financial statements. The financial statements include a balance sheet, an income statement, a statement of cash flows, and a Shareholderâ€™s equity statement. Together, these financial statements measure the state of a business. The numbers determine if a company will have longevity or if it is headed towards disaster. These financial statements are normally made public for anyone to access.
Managerial accounting is analyzing data that would be needed to make decisions. I gave an example previously about a manger using data to determine how many hours that needed to be scheduled for employees. By analyzing the ins and outs of the business, a manger can then make decisions that will be more beneficial to the company. That is why this information is kept private within the company. Another way to use company data to make decisions is by deciding what inventory the company should stop investing in. For example, if a certain brand of chips is not selling well at the local grocery store, it would be foolish to order more so they can get old. Product that doesnâ€™t sell is a loss to the company.
Kimmel, P. D., Weygandt, J. J., & Kieso, D. (2016). Accounting: Tools for Business Decision Making (6th ed.). Hoboken, NJ: John Wiley & Sons.