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Role of Financial Accounting Versus Managerial Accounting Matrix
Compare and contrast financial accounting and managerial accounting by answering the following questions in the matrix provided. Cite any sources you use in accordance with APA guidelines.
Term or Concept
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...
References: 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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