MANAGEMENT ACCOUNTING
1. Explain the following:
(a) Financial accounting
Is concerned with the provision of information to external parties outside the organization and also concerned with the classification and recording of financial transaction in monetary terms in accordance with the established concepts, principles, accounting standards and legal requirements and presents the effects of the transactions on the performance and financial position of the business.
(b) Cost accounting
Is concerned with the ascertainment of cost of manufacturing a products or giving a service and the way in which costs can be controlled. It also provides the details information relating to costs for planning, controlling and decision making.
(c) Management accounting
Is concerned with identifying, presenting and interpreting information to assist management in the formulation of policies and in the planning and controlling of the operation of the business. It also concerned with the provision of information to people within the organization to help them to make better decisions. 2. Explain two (2) differences between financial accounting and cost & management accounting.
Differences
Financial Accounting
Cost & Management Accounting
(a) Users
Mainly the external users such as creditors, tax, authority, government, banks, potential shareholders and etc.
Internal users who are the managers, owners, shareholders, and staffs.
(b) Legal requirements
Financial statements are prepare in accordance with the Companies Act and the Accounting Standards.
Reports prepared are not bounded by any legal requirements and accounting standard.
3. Explain two (2) similarities between financial accounting and cost & management accounting.
Similarities
Explanations
(a) Decision making
Used information to make decisions i.e. involves in selecting the best course of action given alternatives.
(b) Recording
Concerns with classifying, recording, summarizing and
(a) Financial accounting
Is concerned with the provision of information to external parties outside the organization and also concerned with the classification and recording of financial transaction in monetary terms in accordance with the established concepts, principles, accounting standards and legal requirements and presents the effects of the transactions on the performance and financial position of the business.
(b) Cost accounting
Is concerned with the ascertainment of cost of manufacturing a products or giving a service and the way in which costs can be controlled. It also provides the details information relating to costs for planning, controlling and decision making.
(c) Management accounting
Is concerned with identifying, presenting and interpreting information to assist management in the formulation of policies and in the planning and controlling of the operation of the business. It also concerned with the provision of information to people within the organization to help them to make better decisions. 2. Explain two (2) differences between financial accounting and cost & management accounting.
Differences
Financial Accounting
Cost & Management Accounting
(a) Users
Mainly the external users such as creditors, tax, authority, government, banks, potential shareholders and etc.
Internal users who are the managers, owners, shareholders, and staffs.
(b) Legal requirements
Financial statements are prepare in accordance with the Companies Act and the Accounting Standards.
Reports prepared are not bounded by any legal requirements and accounting standard.
3. Explain two (2) similarities between financial accounting and cost & management accounting.
Similarities
Explanations
(a) Decision making
Used information to make decisions i.e. involves in selecting the best course of action given alternatives.
(b) Recording
Concerns with classifying, recording, summarizing and