Essay about Financial Accounting versus Managerial Accounting Matrix

640 WordsJul 19, 20153 Pages
University of Phoenix Material 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 Financial Accounting Managerial Accounting What is the primary purpose of the accounting system? The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities. Must be performed according to GAAP (Generally Accepted Accounting Principles) guidelines. Managerial accounting differs from financial accounting…show more content…
(External) Managerial Accounting reports are primarily used by supervisors, line managers, process owners, as well as executives, to gain a better understanding of the current financial and operational health of the organization. (Internal) What portion of the company is the primary focus? The primary focus of the Financial Accounting is the Company and Enterprise Level. The primary focus of the Managerial Accounting goes down to the Individual Operating Unit. What time periods are included? Historical and Actual Results typically reported on a quarterly and annually basis. Plans, Actual Results and Forecasts that depends on management’s needs; some daily some only once per year. Are there any requirements for the standards of report presentation? GAAP (Generally Accepted Accounting Principles) determine the content and format of financial statements. SEC (Securities and Exchange Commission) requires publicly traded companies to issue annual audit. Concerns are about adequacy of disclosure; and behavioral implications are secondary. Management determines what they would like to include in the report. No authoritative body requires managerial accounting reports. Management carefully considers behavioral implications, when designing the managerial accounting system. If accounting were your career choice, which of the two would you choose? This decision would depend on the organization type, for instance if it were a publicly traded
Open Document