Managerial Accounting Alberto R. Flores Trident University International Module 3 Case Assignment ACC 403 Managerial Accounting This case assignment will discuss managerial accounting and different income statements a business owner may use internal to the company. Divided into two parts, part one will discuss and analyze the difference between managerial and financial accounting, the needs for financial information used for internal purposes. Additionally, it will focus on the managerial accounting profession and how its roles have changed in today’s business. Expanding on the profession, it will comment on the Certified Management Accountant (CMA) certification and how it differs from the CPA certification. Part two of this assignment …show more content…
Financial accounting focuses on providing financial statements to stockholders and internal and external users. Financial statements created under managerial accounting provide instructions and data used for internal business management purposes in effort to compute cost of product. Financial accounting provides data for the sole purpose of preparing companies financial statements. Unlike financial accounting, managerial accounting uses past records to forecast future budgets; additionally it doesn’t adhere to any set financial accounting standards such as US GAAP or IFRS (Averkamp). Financial accounting creates financial income statements, balance sheets and cash flow statements under the guidelines of US GAAP or IFRS; however managerial accounting prepares in-depth management products to include cost volume profit analysis, profit planning, operational budgeting, capital budgeting to name a few …show more content…
As there are similarities between the two income statements, there are differences as well. The absorption income statement considers variable and fixed manufacturing costs as part of the overall inventory costs to include cost of goods sold calculation. Additionally, this income statement shows gross profit, operating profit and pretax and post-tax net income for an accounting period, also this income statement format is required by US GAAP for external reporting. While on the other hand, the contribution income statement uses the variable costs and report fixed manufacturing costs as part of the overhead costs during the accounting period; additionally they are not considered part of the product costs (Basu). The theory behind this approach lie in part of the fact companies incur fixed costs regardless of the sales volume and should not be part of the product costs (Basu). Under these two accounting approaches net income most likely will not be the same as fixed manufacturing overhead cost is not treated the same way under the two accounting methods (Accounting
In order for Jim Turin & Sons, Inc to have used this method of accounting it would have had to match the cost of the merchandise with the revenue earned from the sale. Using the matching of revenue and cost the company would have had to have kept an actual inventory and maintained records of the costs associated with said inventory. Since the costs are not immediately deducted under the accrual method they are deferred to the year when the merchandise is
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The stereotypical image correlated to the account mirrors that of a public accountant. An individual working as a public accountant can expect to work as an independent third party to a multitude of companies. As this third party it is their duty to oversee financial transactions to ensure that the statements of not only the company, but also its’ supporting companies, correctly correspond and match up to the position, results and cash-flow of the clientele. This general quota outlining a public accountants job description is not the same for a private accountant. The main difference between a public and private accountant is that unlike the public and its handle on a multitude of accounts, a private accountant specializes with a certain company or field. With this specialization, a private accountant tackles setting up a system that records the transactions within the business. The recordation of the transactions is then generated into statem...
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
Regarding form, management accounting does not provide for any standard format of preparing management accounts.It follows any size as long as the information is well presented to internal users and management of an organization to enhance decision-making. On the other hand financial accounting prescribes a composition for preparing published financial statements and accounts following a standard size as guided by Generally Accepted Accounting Principles (GAAPs) and International Financial Reporting Standards (IFRS).In financial accounting, there are concepts which accountants must adhere to in preparing financial statements.The accountants are guided by uniform concepts and standards of reporting which is not the case in managerial
Chapter Summary. (n.d.). Financial and Managerial Accounting | . Retrieved May 28, 2014, from http://highered.mcgraw-hill.com/sites/0072396881/student_view0/chapter6/chapter_summary.html
Management accountants and the system of management accounting have had a core importance in working and operations of the corporates. Over the years they have been fulfilling their traditional job requirements such as bookkeeping, recording and reporting financial information. It is believed that as over the years business and corporate world has evolved and gone through many changes and management accountants being part of this system would also face transformation in their roles. It is the versatility that is being demanded today therefore a professional cannot limit or restrict itself to its particular job. It is a fact that management accountants are performing multiple jobs as a result of the increasing competition in the labour market. Therefore the aim of this report is to highlight how the corporate world has evolved over the years; how it demands changes in the role of management accountant, what are the factors that have contributed to these changed roles and the decisions they have to make.
Financial Accounting is an accounting system that tries to meet the needs of the various user
Financial accounting is the part of accounting that is interested in the summary, consistent analysis and reporting of a financial transaction such as income statement, et al. that pertains to the company, which will be sent out to the public. Whereas, management accounting involves identifying, recording, measuring, interpreting and transferring financial and nonfinancial information for the purpose of making vital short-term decisions within the organization.
I am interested in conducting research and teaching in managerial accounting, auditing and assurance services and accounting information systems. In particular, I am interested in exploring the role of accounting information systems in decision making, internal control, and auditing. In order to gain an appreciation of these and related issues, it is essential for me to have a strong grounding accounting, accounting information systems, information technology, managerial accounting, as well as gain a general economic and management perspective.
Marshall, D. H., McManus, W. W, & Viele, D. (2002). Accounting: What the Numbers Mean. 5th ed. San Francisco: Irwin/McGraw-Hill.
The authors aim to study the body of the knowledge that CPAs should possess. They emphasised the following knowledge; humanities, micro-economics, macro-economics, behavioral science, mathematics, statistics, probability, law, and functional fields of business (quantitative methods, finance, production, marketing, personnel relations, and business management). It should acknowledge that the study also focuses on some areas that are seen today as part of generic skills includes (formal organizations, computers, evidence and opinion). This can be attributed to the important of technical knowledge as fundamental part of accounting skills sets that is complemented by generic skills set. Despite the fact that work of Roy and MacNeill positively agreed from those who are responsible for accounting education in a practical environment of accounting the finding of the report is not
An accounting manager is responsible for the financial health of a company, and the development of strategies and plans for long-term financial goals of their organization. They oversee the daily operations of the accounting department, forecast the financial needs of the company and assist the company manager with organization by assigning projects and directing staff. In order to successfully manage a company’s finances, the financial manager reconciles day-to-day accounting activities and establishes financial status by developing and implementing systems for collecting, analyzing, verifying and reporting financial information. A financial manager is also responsible for establishing and enforcing proper accounting methods and policies, as well as helping auditors who will verify the accuracy of the financial reports and look for any misrepresentation or fraud within the
Marshall, D., McManus, W., & Viele, D. (2004). Accounting: What the numbers mean. [University of Phoenix Custom Edition e-text]. New York, NY: McGraw-Hill Companies.
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000