Financial Accounting Information And Management Accounting

1434 WordsNov 13, 20146 Pages
The aim of this assignment is to “Identify the ‘other users’ [of business accounts] and assess the extent to which financial accounting information is of use to managers, and management accounting information is of use to ‘other users’.” The appropriate definitions and roles of financial and management accounting will be given and the ‘other users’ of accounts will be identified. Thereafter, the uses of both financial accounting information and management accounting information will be discussed and analysed to evaluate the extent to which each is of use to the needs of managers and ‘other users’ respectively. “Financial accounting is a system that accumulates, processes and reports information about [a business] entity 's performance…show more content…
There is no specific format for management accounting systems as they are geared towards internal users of the information and are not compared to different organisations. Management accounting systems focus on both the present and the future performance of a business entity. The role of management accounting “involves partnering in management decision-making, devising planning and performance management systems … to assist [the needs of managers] in the formulation and implementation of an organisation’s strategy.” (IMA, 2014) Stakeholders are any individuals, groups or organisations with a degree of vested interest in a business. The ‘other users’ (excluding managers) of financial accounts are stakeholders both external and internal to the business entity. These stakeholders include lenders, investors, government agencies and many more. Lenders would be interested in information such cash flow statements to determine whether their loans and interest due will be paid on time. Investors would analyse the performance and value of a business entity to decide whether to hold, buy or sell the business entity’s shares. Government agencies such as HM Revenue & Customs would need to access financial accounts to calculate the taxable income of a business entity. There are many external users of
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