Financial vs. Managerial Accounting
opinion Essay
1091 words
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002) Managerial Accounting addresses those aspects that relates to an individual organization return on investments (ROI). (Albrecht, Stice, Stice, & Skousen, 2002) A company’s profitability depends on periodic attention to its assets turnover and profit margin. This process is designed to support the decision making that adds value to an organization. Organizations are sometimes broad and divisional. Planning, controlling, and evaluating is key in the effective decision making process. (Albrecht, Stice, Stice, & Skousen, 2002) An organization must make decisions about its future products, services, operations, and investments. It must begin a tracking process for cost, quality, and performance. Finally it must analyze the results, and variances, providing feedback to assess areas of personnel, divisions, products, and processes. (Albrecht, Stice, Stice, & Skousen, 2002) Managerial accounting is unique to the individual organization. This internal a... ... middle of paper ... ... and managerial accounting is the types of reports prepared. Internal reports are tailored to meet the need of management and may vary from business to business. External reports however, follow certain standards and guidelines and are thus more uniformed among companies. (Albrecht, Stice, Stice, & Skousen, 2002) No government regulator or auditor is going to insist that a company implement a good management accounting system. (Garrison, Noreen, & Brewer, 2010) The choice of how to collect and utilize information in a company is strictly management’s decision and is a part of the company’s competitive strategy. Works Cited Albrecht, W. S., Stice, J. D., Stice, E. K., & Skousen, k. F. (2002). Accounting Concepts and Applications. Cincinnati: South-Western. Garrison, R. H., Noreen, E. W., & Brewer, P. c. (2010). Managerial Accounting. New York: McGraw Hill/Irwin.
In this essay, the author
- Explains that financial and managerial accounting are used for making sound financial decisions about an organization. they provide information of past quantitative financial activities and are useful in making future economic decisions.
- Explains that managerial accounting addresses the aspects that relate to an individual organization return on investments (roi).
- Explains that managerial accounting is unique to an organization and is used strategically in accomplishing the organization's mission and goals.
- Explains that managerial accounting helps managers deal with future economic decisions. the ever-evolving changes such as competition, customer needs and desires, and ecomonic conditions demands a manager's attention and rational decision.
- Opines that managerial accounting is discretional by the individual organization and does not need to follow the generally accepted accounting principles.
- Compares financial accounting with managerial accounting, which summarizes past financial transactions and activities. these reports are required by regulating bodies such as the sec and irs.
- Explains that the sec regulates issuance and trading of securities in the united states and monitors insiders trading and stockbrokers' behavior.
- Explains the importance of ethics and integrity in accounting. wall street's expectations about a company and not its actual performance sometimes lead to inflation of numbers.
- Explains that the governing body (fasb) is acknowledged as the source of authoritative accounting standard by the private sector in the united states. globalization has required companies doing business around the world to institute another set of standard.
- Explains the differences between financial and managerial accounting. internal reports are tailored to meet the need of management, while external reports follow certain standards and guidelines.
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- Managerial Accounting Essayanalytical essayChapter 2 Literature review “The Changing Role of Managerial Accounting and the Managerial Accounting Profession in Romania” Managerial accounting has historical antecedents that stretch back to the beginning of the 1900s. Whether it was called cost accounting, or industrial accounting, or administrative accounting it is certain that concerns regarding production cost calculation, expenses’ classification and analysis, resource consumption administration, and pre and post cost calculations, have existed since the beginning of the 90s (Cardos & Cardos, 2010). Simon (1978) conducted a study about the role managerial accounting. In his opinion managers have three major expectations regarding to management accounting roles: scorekeeping (capturing,
In this essay, the author
- Describes the historical antecedents of managerial accounting, stating that concerns regarding production cost calculation, expenses’ classification and analysis, resource consumption administration, and pre and post cost calculations have existed since the beginning of the 90s.
- Explains that managers have three major expectations regarding managerial accounting roles: scorekeeping, attention directing, and problem solving. managerial accounting supports the process in all stages.
- Explains the changing role of managerial accounting roles, from being a scorekeeper to being an active advisor of management in the decision making process.
- Opines that managers should be able to obtain non-financial data as well as traditional financial data. forecasts, trend data, and demand estimates should also be provided to managers.
- Explains how mia and chenhall developed mas to include non-financial data focusing on predictive information and functional areas to enable managers to make more informed decisions.
- Analyzes gordon and miller's findings that management accounting systems are correlated with environmental, organizational, and decision-making style factors.
- Analyzes hayes' study of the influence of broadscope managerial accounting systems on the propensity to create slack.
- Explains how burns hypothesized that if accounting information is considered irrelevant for the set of decisions to be made, then it will not affect decisions.
- Opines that if accounting information is a decision input and an objective sought by the decision-maker, then it will affect decisions.
- Explains burns' opinion that the effects of non-accounting information on decisions can be analyzed in the same framework as accounting information.
- Explains gordon and miller proposed a broad framework for information systems to achieve the needs of decision makers. they believed that managers should have access to production, finance, and marketing information.
1333 wordsRead More - An MBA Graduate Definedcomparative essayManagerial Accounting is vital to a business’s success because it quantifies a firm’s performance. By quantifying certain performance variables, senior management can carry out its two most important functions: 1) Decision-Making/Planning and 2) Controlling Employee Behaviour.
In this essay, the author
- Explains that an mba degree is awarded to individuals who complete required coursework in the field of management science. an mba manager is similar to the captain of a ship.
- Concludes managerial accounting is a process mba graduate managers can use to gain insight into planning/decision-making and employee control. it involves examining financial accounting data and applying that information to maximize profits through marketing and operations functions.
- Explains managerial accounting is the process of using information systems to provide data to senior managers who use this data for decision-making/planning and monitoring employee performance in order to maximise profits.
- Explains how financial accounting documents provide senior managers with a tangible starting point for decision-making/planning and analysing employee performance.
- Illustrates how financial accounting data can be used to make marketing decisions and plans about future output.
- Illustrates an operations function employee control problem that can be addressed by mba graduates through managerial accounting.
2179 wordsRead More - Debenhams PLCexplanatory essayManagement accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
In this essay, the author
- Explains debenhams plc's overheads and traditional absorption costing, which is represented in four steps.
- Explains that debenhams started in 1778 when william clark opened a store, selling expensive fabrics, bonnets, and parasols. in 1813, clement freebody invested in the business and renamed it to 'depenham'. management accounting in organisation is important for decision-making.
- Explains how debenhams plc can use non-costing management accounting techniques such as variance analysis, cost volume profit analysis and investment appraisal.
- Cites colin drury, management and costing accounting, (7th edition), chapter 3, cost assignment, p. 54-59.
2104 wordsRead More - Decision Making in Managerial Accountingexplanatory essayManagerial accountants need to use accounting information in seeing to it that they are able to plan, evaluate the company performance, manage risks and control the business operations in a manner that is deemed beneficial to the business as a whole (Caplan, n. d). This can be achieved through: having high standards of ethics in all situations; employing the techniques of management reports, budgetary control, and analysis of fund flows and financial statements; making prudent capital investment decisions; and maintaining continuous quality control systems.
In this essay, the author
- Explains managerial accountants need to use accounting information to plan, evaluate company performance, manage risks, and control business operations in a manner that is deemed beneficial to the business.
- Explains managerial accounting as a synonym for management accounting, which entails the provision of accounting information to the managerial accountants of particular organizations to make informed decisions that touch on the business.
- Describes the four main elements of ethical behavior in management accounting, including stealing office supplies, accepting bribes, and inflating expense accounts and labor charges.
- Explains that management accountants are obliged to make a consistent improvement on their skills, which ensures professional competence. competence entails following the rule of law at all times.
- Opines that management accountants are custodians of useful information of their businesses. management accounting information is high confidential and should only be disclosed out of good faith.
- Opines that management accountants should minimize situations that lead to a conflict of interest. the duties and interests of the business should override personal interests.
- Opines that management accountants should maintain a high degree of objectivity whenever they are required to provide information regarding the business. they should not tailor accounting information so as to entice either existing or prospective shareholders.
- Explains that managerial accountants employ certain techniques to provide the required information for management purposes.
- Explains that management accountants are tasked with drafting budgets for the upcoming financial periods and comparing the actual results with the budgetary estimates.
- Explains that management accountants prepare timely reports which are submitted, detailing how each part of the business has been performing. this helps them in evaluating and making decisions that touch on the firm.
- Explains that fund flow analysis evaluates the firm's working capital for specific accounting periods. fund flow statements showcase the inflow and outflow of funds resulting from various operations of the business.
- Explains that managers analyze and try to make interpretations of what is contained in the income statements and the balance sheets. larocco (2007) affirms that this gives them information useful for their management roles.
- Explains that managerial accountants are expected to apply management accounting techniques in their daily activities within the organization.
- Explains that management accountants should give extra attention to decisions that touch on the firm's capital structure. capital structure encompasses long-term debts as well as equity and preference shares.
- Explains that debt/equity (d/e) has a strong positive relationship with the profitability ratio of gpr, opr and npr.
- Opines that managerial accountants should uphold a high ethical standard in order to undertake the roles of planning, performance evaluation, risk management and operation control.
- Explains that managerial accountants use accounting information to plan, evaluate company performance, and control business operations. maksoud (2011) asserts that management accounting involves strategic, performance and risk management.
- Explains that management accounting is forward-looking and budgeting enables businesses to have a blueprint of what income they expect and how they intend to spend in the future.
- Explains that quality control is closely associated with quality assurance. managerial accountants should be careful when coming up with measures to control the quality of their products or services.
- Explains the influence of competition on the deployment of contemporary management accounting practices and managerial techniques in egyptian firms.
- Explains gao, s., and gunasekaran, a. global accounting and control: a managerial emphasis.
- Explains liao, s.s., maksoud, a.b.
- Describes neranda, b., reichelstein, s.
- Explains wang's application of fuzzy set theory to the weighted average cost of capital and capital structure decision. westgard, j. o.
2652 wordsRead More - Management Accounting Essayexplanatory essayThe nature of business has changed and evaluation. ‘New techniques have been developed and existing one has adapted to try to ensure that management accounting retains its relevance’ (Atrill, P. el at 2013, pg. 12). Then, what is management accounting? ‘The application of professional skills in the preparation and presentation of accounting information in such a way as to assist management in the formulation of policies and in the planning and control of the operations of the undertaking’ (Tyagi, C. el at 2003, pg.12). The management accounting is very significant thing in the operation which this might consider as tools that allows administrators to manage their enterprise, make internal stakeholder understand more and cooperate
In this essay, the author
- Explains that management accounting is a tool that allows administrators to manage their enterprise, make internal stakeholder understand more and cooperate with each other to achieve goals.
- Explains that budgeting is one of the optional strategies directly through financial terms in short-run which used to control and plan rather than predict future.
- Explains that changes in the competitive environment lead every organization to seek for better concept in order to compete with their competitors.
742 wordsRead More - Essay On Managerial Accountingexplanatory essayManagerial accounting has changed over the years. Managerial accounting focuses on more than the financial aspect. We will be looking at how managerial accounting affects the business world today. Business also look to the economy, federal taxes, and the financial market so it can make the best decisions for their business.
In this essay, the author
- Explains how managerial accounting affects the business world today. business also look to the economy, federal taxes, and financial market to make the best decisions for their business.
- Explains that managerial accountants are critical with their analysis while managing a business. they provide non-financial information and can streamline e-business. global competition has new challenges for managerial accounts.
- Explains toyota's toyota production system, which had a lean process when it came to production. managerial accountants found better ways to measure the just in time approach.
- Explains toyota's just-in-time philosophy, takt time, and continuous flow processing, which reduces wip, improves labor efficiencies and fewer defects.
- Explains how federal taxes, the state of the economy, and financial market affect business decisions on the short-term.
- Explains that the state of the economy can affect the decisions that businesses make. when an economy is in good shape but looks like there is going to be a down turn coming soon, they have to look at the cost of production, materials, and labor.
792 wordsRead More - Compare And Contrast Financial Accounting And Managerial Accountingargumentative essayComparimg and Contrasting Financial Managerial Acctounting American Public University ACCT 105 Joshua Bone Financial accounting is the analysis, classification, and recording of financial transactions and reporting such information to respective users especially external users who use the information to make decisions about their engagements with the entity. In financial accounting general purpose financial statements are used for external reporting. The public by standards imposes the development of the statements through respective national professional bodies, International Accounting Standards Board and respective company Acts for various nations. On the other hand, managerial accounting is category of accounting that provides special purpose statements, and it reports to management and other persons inside the
In this essay, the author
- Explains that financial accounting is the analysis, classification, and recording of financial transactions and reporting such information to respective users. general purpose financial statements are used for external reporting.
- Explains managerial accounting is a category of accounting that provides special purpose statements and reports to management and other persons inside the organization. it is future-oriented and proactive, unlike financial accounting which relies on past information to report to external users.
- Argues that financial accounting helps external stakeholders make informed decisions by obtaining information on how efficiently the management is performing its steward function.
- Explains that management accounting is more detailed in its reporting and provision of information, whereas financial accounting provides summarized information based on quantitative information only. managerial accounting incorporates both monetary and non-monetary aspects of accounting.
- Argues that managerial accounting provides data regarding cash rounding of estimates of figures for future date hence not thoroughly probable regarding the accuracy of information.
- Opines that management accountants are not required to prepare financial statements as per the law. company acts require a business to present financial reports to the public.
- Explains that management accounting does not provide for any standard format of preparing management accounts. financial accounting prescribes a composition to prepare published financial statements and accounts, guided by generally accepted accounting principles and international financial reporting standards.
- Compares management accounting with financial accounting, which focuses on segments in an organization like a department and provides information specifically geared towards that specific section to management to make decisions on improving the operational and financial efficiency of the sector.
- Compares financial and managerial accounting to provide information relevant to shareholders and managers to make informed decisions.
799 wordsRead More - The Purpose of Accountingexplanatory essayIn Management, the accountant gives advices to the individuals and business people, how to manage their business. The account information is considered and some business decisions are taken in both financial and non-financial departments. Budgeting, tax filing, and financial statements. Other activities like involve in planning com...
In this essay, the author
- Explains that the purpose of this document is to describe the nature, purpose, and scope of accounting. accounting involves in preparing financial documents of an entity by analyzing, verifying, reporting this records.
- Explains the main view of this report is to explain how the accounting plays a major role in banking, finance and other sectors of business.
- Explains that the accounting of business is used to record and measure the size of the business, in terms of gains and losses on monthly, quarterly semi-annual and annual basis.
- Explains that accounting in business follows a particular process either in small scale business or large scale businesses with step by step process.
- Explains that in management, the accountant gives advices to individuals and business people, how to manage their business. account information is considered and some business decisions are taken in both financial and non-financial departments.
- Explains that tax accounting is involved in filing the tax returns of the company individually, based on their income, and they need to pay the percentage accordingly to tax rules. taxation on business is another source of income to meet and satisfy the necessary needs.
- Explains that financial accountant prepares monthly, quarterly, semi-annual, and annually financial reports to see the business development. these reports are useful for creditors to decide whether to invest in the company.
- Explains that a budget analyst develops, executes and analyzes budgets for public, private, and nonprofit organizations.
- Explains that auditors audit accounts and verify that all financial reports and statements are correct. in case of unmatched consequences, the organization needs to give explanation on the misrepresentations of wrong statements.
- Explains that accounting plays a major role in developing and growth of the business. financial standards are expected as the complexities of business growth and expansion.
632 wordsRead More - Accounting and Financeexplanatory essayAbstract A largely accepted language is required for a business or organization to effectively communicate its results and position to stakeholders, which is why accounting has come to be known as the "language of business". Accounting is really the means for providing financial information to others. Financial analyst then take the data the accountants have compiled in the form of reports, and make educated guesses at what their company should do next. David ballast (1996) stated, "The fact remains that accounting and finance are the primary tools for reducing business problems and opportunities to a common denominator, setting goals, measuring results, and making decisions.
In this essay, the author
- Explains that accounting and finance are the primary tools for reducing business problems and opportunities to a common denominator.
- Explains that accounting concepts or principles have been developed over the years, and that the financial world generally follows and accepts them.
- Explains that the financial equation (assets = liabilities + equity) is the mechanical key to the entire financial accounting process and the basis to many of these principles.
- Explains the cost principle and objectivity, which are related to transactions.
- Explains that the american heritage dictionary of the english language, fourth edition, is available at answers.com.
- Explains that accounting and finance deal with money and assets, but they are categorically different concepts. accounting has clearly defined guidelines, rules, and regulations, while auditing is a separate discipline.
- Analyzes the relationship between the balance sheet and the income statement.
- Explains the accounting period, when an entity reports its financial statements on a yearly basis. the accrual concept states that expenses or sales are listed at the point of sale or when the ownership changes hands.
- Explains the theories, assumptions and principles of financial statements, including consistency, full disclosure, materiality, and conservatism.
- Explains that accounting and finance are important terms to grasp while reading this essay. accounting involves making value judgments about the assets and liabilities a business owns, while accurately measuring how much profit or loss has been made.
- Explains that ballast, myers, and marcus a. (2004). fundamentals of corporate finance, fourth edition.
1550 wordsRead More - Role Of Management Accountingexplanatory essayAAF001-6 FINANCIAL ANALYSIS ASSESSMENT 2 INDIVIDUAL REPORT MANAGEMENT ACCOUNTING FOR “ASDA” Written and Submitted by: NAME – Saikat Panja Student ID - 1223846 SUBMISSION DATE: Monday 23RD JANUARY 2015
In this essay, the author
- Explains that asda is a subsidiary of walmart, which is the world's largest retail chain. the threat of global warming is already being felt in the fresh foods section.
- Explains that management accounting is different from financial accounting because managers have to take the future decisions by looking at the past financial statements. management accountants have a responsibility to moral qualities which has to be kept intact.
- Explains that the two techniques to be used to solve the above mentioned problems are the zero based budget and the periodic budget.
- Explains denniscaplan.fatcow.com's chapter 1: management accounting defined, described and compared to financial accounting.
- Cites management, 4. (2015). 4 activity based cost systems for management. academia.edu.
- Describes the definition and meaning of management accounting at business dictionary.com.
- Explains that asda: 95% of our fresh produce is already at risk from climate change.
- Analyzes how asda's five-year strategy is the right one, according to lawson.
- Describes management accounting as the process of preparing reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.
- Opines that asda can control global warming by taking measures, such as reducing the supply of water, and identifying farmers who follow monoculture production.
- Opines that asda should open small retail stores within the towns so that the customers can walk and reach the shop for shopping.
- Explains the strengths of their assessment, which is that the problems mentioned above are faced in the real world by asda.
1928 wordsRead More