Managerial Accounting Case Assignment

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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

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