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Managerial Accounting Versus Financial Accounting Essay

2578 words - 10 pages

Final Essay: Accounting 206
Final Essay: Managerial Accounting versus Financial AccountingHeather SpencerAcc 206Instructor Lisa FoleyMay 17, 2010In this essay I will discuss what management accounting is and what the sources of data are. I will also divulge the differences in these accounting methods. In my learning of accounting principles, I have learned that there is a difference between financial accounting and managerial accounting. The main difference between the two is that managerial mainly focuses on the business itself and is really a significant role in the business being able to withstand the market and current economy. This type of accounting is mostly hands on and financial accounting focuses more on the reviewing of the financial statements to an external source (not a part of the business or company.) A company that provides stocks and bonds and is public business (where anyone can see how they are doing) such as Chase bank, and JP Morgan and this keeps a company honest in its work. Making a good ethical decisions in business require facts and truth. Not subjectivity and half-truths. The difference between these two different types of accounting is that, when doing managerial accounting its main emphasis is on the future predictions of the company.Managers direct people to do certain tasks, such as taking out the garbage, or doing the dishes, the job is being delegated to the employees and they fulfill the requirements and get paid. Sometimes depending on the job and position you are in with the company, the benefits and or consequences of failing at a task depend greatly on the profession. For the military, the consequences of failing a mission could mean life or death. The decision is based on a moment's notice and is taught early on that the first decision you make is the best decision to go with because when you second guess, mistakes can be made and errors can occur. In the financial accounting world any business that has stocks and bonds, and allows the public to invest then that company, such as Amazon.com and Google. They are obligated to provide financial documents about themselves in order to ensure that the financial standings are positively accurate. A few incidents involving bloated numbers and ethical misconduct have led to the demise of one American energy company by the name of Enron; the biggest bankruptcy scandal that shook the financial world in America. But that's a different essay. Ethics come into play in a person's life every day, the decisions they choose affects every aspect in the business world as well.In Accounting there is a code of conduct and an obligation to the public, the organization they serve, and themselves to maintain the highest of ethical standards. The purpose of accounting is to provide the information that needed for sound business/economic decision making. The main difference between each accounting method is that managerial accounting is not required by law to do so. In financial...

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