Managerial And Financial Accounting Essay

933 words - 4 pages

Managerial and Financial Accounting Paper PAGE 1
Running Head: Managerial and Financial AccountingManagerial and Financial Accounting PaperTeam AUniversity of Phoenix-AustinACC/300 Principles of AccountingManagerial and Financial Accounting PaperIn today's corporate world, it is common to find financial statements relating to managerial and financial accounting. The financial statements are critical to both external users of the corporation as well as internal managers within the corporation. The purpose of this paper is to define the differences between managerial and financial accounting, identify the users of managerial and financial accounting, and describe what kind of business decisions the users make with the information.Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals (Investopedia, 2008). Managerial accounting is concerned with providing information to managers inside the organization and those who directly control the company's operations. The management team strives to create value for the organization by managing resources, activities, and people in order to attain the organization's goals effectively. The main objective of managerial accounting is to motivate managers and other employees to direct their efforts towards achieving these goals (Gillet, 2000). The organization's overall goals are accomplished by communicating the plans, providing a measurement of how well the plan was achieved and giving proper explanations of the differentiations from the original plan. Managerial accounting information includes financial and non-financial data to help managers with strategic planning and decision-making such as the cost of products, budgets, and cash flows (Gillet, 2000). The management team also compares actual costs incurred with those specified in the budget such as analyzing and comparing actual performance to budget plans (Gillet, 2000). A vital role of managerial accounting is frequently to review how the company compares with the competition. By comparison, this allows the company to evaluate its financial and internal performance, customer satisfaction, and improvement compared to other comparable companies or organizations (Gillet, 2000).Financial accounting is used to prepare financial reports which illustrates an organization's performance to external parties like creditors, investors and tax authorities (Hilton, 2006); or to simply prepare accounting information for people outside of the organization or are not necessarily involved in the daily interaction of the company. Financial accounting is very precise on information which follows the rules of G.A.A.P. and is mandatory for most businesses. The information provided in financial accounting helps prospective investors determine if a particular company is worth investing in. Financial accounting reports what has happened in the past with the preparation of...

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