Managerial Accounting vs Financial Accounting Essay

761 Words Mar 31st, 2008 4 Pages
Managerial and Financial Accounting
ACCT/300: Principles of Accounting
April 9, 2008

Managerial and Financial Accounting
This paper will attempt to differentiate between managerial and financial accounting, the users of managerial and financial accounting and what type of business decisions would be made with the information.
Managerial Accounting
Managerial accounting provides accounting information to managers who are inside an organization and who directs and controls its operations, to help them make decisions to manage the business. For example, it provides information on the costs of an organization’s products and services, which managers can use products cost to guide the setting of selling prices, and use services cost
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Financial and managerial accounting are both very important aspects of the business world. Most companies have some form of each type of accounting incorporated into their business operations. By following the appropriate standards for each, a company will be able to successfully keep track of their financial standing for internal as well as external purposes.
Financial accounting involves the preparation of a business's financial statements, mainly for External users outside the business. These reports are primarily used by owners, potential owners of a business, and by people who have loaned money to a company. They analyze this information in conjunction with general economic information, such as information about the industry in which the company operates. External users focus on broad information that reveals the overall performance of the company as a whole. In addition, financial accounting only reports information on financial transactions that have occurred in the past. Stockholders, suppliers, and banks also benefit from the financial reports that are generated. (Horngreen, Stratton, & Sundem, p. 5)
Managerial Accounting Managerial accounting provides information for internal users of accounting data. Internal users include employees, managers, and executives of the company. Internal accountants prepare budgets to express management's goals in financial terms by identifying, measuring,
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