This assignment is about Financial and Managerial Accounting. There is also a discussion on Stakeholder Decision Making Process. Therefore, compare and contrast financial and managerial accounting.
Financial and Managerial Accounting – Stakeholder Decision Making Process
Description
Write a 750 – 1250 word paper on the following topic:
Compare and contrast financial and managerial accounting. Provide one specific, real-life example of how either accounting helps external stakeholders make informed decisions. Additionally, how accounting helps managers to improve operational and financial performance.
Your paper must be formatted according to APA 6th edition guidelines, and you need to use at least three external references
Financial and Managerial Accounting – Stakeholder Decision Making Process
A common question is to explain the differences between financial accounting (FA) and managerial accounting (MA), since each one involves a distinctly different career path. In general, FA refers to the aggregation of accounting information into statements, while MA refers to the internal processes used to account for business transactions. There are a number of differences between FA and MA, which fall into the following categories:
- Aggregation. FA reports on the results of an entire business. MA almost always reports at a more detailed level, such as profits by product, product line, customer, and geographic region.
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Efficiency. FA reports on the profitability (and therefore the efficiency) of a business, whereas MA reports on specifically what is causing problems and how to fix them.
Financial and Managerial Accounting – Stakeholder Decision Making Process
- Proven information. FA requires that records be kept with considerable precision. needed to prove that the financial statements are correct. MA frequently deals with estimates, rather than proven and verifiable facts.
- Reporting focus. FAis oriented toward the creation of financial statements, which are distributed both within and outside of a company. MA is more concerned with operational reports, which are only distributed within a company.
- Standards. FA must comply with various accounting standards, whereas MA does not have to comply with any standards when information is compiled for internal consumption.
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