Managerial and Financial Accounting
Financial statements are extremely valuable in the business world. Financial statements let a company know not only how profitable they are, but the statements can also pinpoint areas that may need improvement. Areas for improvement could be labor costs, cost of goods sold, and other operational costs.
There are two different kinds of accounting methods, managerial accounting, and financial accounting. This paper will explore the similarities and the differences between the two accounting methods as well as the different users of the two methods. Each method has its own value, depending on the needs of the business and the users.
Managerial Accounting
Managerial accounting information includes data on the costs of an organization’s products and services, budgets, performance reports, and anything else that will assist managers and employees in planning and control activities (Geense, 2005). Some examples of managerial accounting are reported expenses of an operating department, calculated costs of producing a product, measurements of economic performance.
Management accounting is not subject to the rules of GAAP and is continually reported unlike Financial Accounting.
This is because the information provided by management accounting is intended for internal users only and is not available to the public. Therefore, since there is no public interest, there is no need to protect public interest regarding this information (Bushman,2007).
Financial Accounting
For the purposes of this subject, financial accounting must first comply with the generally accepted accounting practices (GAAP). Financial accounting provides relevance to aid in decision-making. Financial accounting must be reliab ...