The Justifications for Business Retaining the Management and Financial Accountant

The justifications for business retaining the management and financial accountant

The difference between management and financial accounting is that Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. Courses in financial accounting cover the generally accepted accounting principles which must be followed when reporting the results of a corporation’s past transactions on its balance sheet, income statement, statement of cash flows, and statement of changes in stockholders’ equity.

Whereas Managerial accounting has its focus on providing information within the company so that its management can operate the company more effectively. Managerial accounting and cost accounting also provide instructions on computing the cost of products at a manufacturing enterprise. These costs will then be used in the external financial statements. In addition to cost systems for manufacturers, courses in managerial accounting will include topics such as cost behaviour, break-even point, profit planning, operational budgeting, capital budgeting, relevant costs for decision making, activity based costing, and standard costing.

Financial and operating data

Relevance of data

Financial accounting data should not be biased it should be accurate. For internal uses mangers want information that is relevant even if it is not absolutely biased or accurate.

Segments of an organisation

Financial accounting is important concerning the reports of the whole company. Managerial accounting pays much more attention on the segments of a company. These segments may be product lines, sales territories, divisions, departments or any other categories that management finds useful. Financial accounting needs some break-downs of revenues and costs major segments in external reports , but this is a secondary emphasis. In managerial accounting, segments reporting is the primary...