Three Characteristics Of Managerial Accounting Vs. Financial Accounting

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Management and Financial accouting are both important tools for a business. However, Managerial Accounting and Financial Accounting have many differences. The primary users of the Managerial Accounting is internal users such as managers while the Financial Accounting is external users such as creaditor, stockholder and government regulators. The purpose of Managerial Accounting is to help managers fulfill their three responsibilities that are planning, directing and controlling. Planning is plan the business operations involve developing detailed financial and operational descriptions of anticipated operations. Directing operational activities simply means running the organization on a day-to-day operation. The day-to-day operation of management…show more content…
Managerial accounting is focusing on providing information within the company to help manager more effectively in operating the company. Managerial accounting also provide instruction at a manufacturing enterprise about the computing cost of products. Then these costs will be used in the external financial statements. Managerial accounting is also referred to as "strategic finance" (Principles of accounting: Volume II, 2012). Besides this, managerial accounting will also include cost behavior, operational budgeting, capital budgeting, activity based costing, break-even point, profit planning, relevant costs for decision making and standard costing. Based on Managerial Accounting third edition, cost behavior is how cost change as volume changes. The three most common cost behavior is variable, fixed cost and mixed cost. Capital budgeting is the process of making capital investment decision. Capital investment is including buying new euipment, building new plants, automating production and developing major commercial website. An operating budget is a combination of known expenses, expected future costs, and forecasted income over the course of a year. The break-even point is a point where total sales and total cost are equal. Break-even point can be described as a point where there is no net profit or
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