What is the primary purpose of the accounting system?
The primary purpose is to produce forms portraying a company’s performance over a period of time to make sound judgement on economic decisions. Managerial accounting is the collection, analyzing, and reporting of information concerning operations (Bragg, 2012). What are the types of reports produced?
Financial accounting creates reports that reflect the business’ financial health for external users.These include balance sheets, income statements, and statement of cash flow. These reports are aimed for internal use and provide data on past, as well as future, numbers in operations.
Budget reports, Job cost reports, sales and revenue forecasts are examples.
Who are the primary users?
External users, such as shareholders, creditors, tax authority all utilize reports generated from financial accounting. Managerial accounting is aimed at providing data for Internal users, such as management of that company, senior supervisors, and other employees.
What portion of the company is the primary focus?
Financial accounting focuses on financial aspects of the company’s history.
External users rely on this information to make decisions concerning the firm. Managerial accounting focuses primarily on the relevance to business decisions and the administrative management portion. The statements are necessary to make sound decisions in operations.
These reports focus on future data. What time periods are included?
The time periods for statements generated in financial accounting generally cover 12 months. There are no specific time periods for managerial accounting. Are there any requirements for the standards of report presentation? Financial accounting is based on historical data and must be accurate and are upheld to standards set forth by Generally Accepted Accounting Principles (GAAP).
Management accounting is not subject to adhering to specific standards or guidelines. If accounting were your career choice, which of the two would you choose? I would choose to work in the financial accounting area if I were to go into accounting, because it is all based on factual data. The objective is to record correct numbers. I would have more difficulty working in managerial accounting rather than financial accounting. Statements created in managerial accounting are revolved around future information and that sounds more difficult to come to the correct answer.
Bragg, S. (March 8, 2012). What are the functions of managerial accounting? Retrieved from http://www.accountingtools.com/questions-and-answers/what-are-the-functions-of-managerial-accounting.html
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