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This site explains some of the most important concepts of financial and managerial accounting. This site is completely free to use.
What is Managerial Accounting:
Managerial accounting is concerned with providing information to managers – that is, people inside an organization who direct and control its operation. Managerial accounting provides the essential data with which the organizations are actually run. Managerial accounting is also termed as management accounting or cost accounting.
What is Financial Accounting:
Financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization.Financial accounting provides the scorecard by which a company’s overall past performance is judged by outsiders.
Managerial accountants prepare a variety of reports. Some reports focus on how well managers or business units have performed-comparing actual results to plans and to benchmarks. Some reports provide timely, frequent updates on key indicators such as orders received, order backlog, capacity utilization, and sales. Other analytical reports are prepared as needed to investigate specific problems such as a decline in the profitability of a product line. And yet other reports analyze a developing business situation or opportunity. In contrast,financial accounting is oriented toward producing a limited set of specific prescribed annual and quarterlyfinancialstatements in accordance with Generally Accepted Accounting Principles (GAAP). (Ray H. Garrison, Eric W Noreen).
Frequently Visited Managerial Accounting Articles:
- Difference Between Financial and Managerial Accounting:
Financial accountingreports are prepared for the use of external parties such as shareholders and creditors, whereas managerial accounting reports are prepared for managers inside the organization……Click here to read full article.
- Just-in-Time (JIT) Manufacturing and Inventory Control System:
Traditionally manufacturers have forecasted demand for their products into the future and then have attempted to smooth out production to meet that forecasted demand. At the same time, they have also attempted to keep everyone as busy as possible producing output so as to maximize “efficiency” and (hopefully) reduce costs……Click here to read full article.
- Product Costs Versus Period Costs:
In addition to the distinction between manufacturing and non-manufacturing costs, there are other ways to look at costs. Costs can also be classified as either product cost or period cost. To understand the difference between product costs and period costs, we must first refresh our understanding of the matching principle fromfinancial accounting……Click here to read full article.
- Under-applied overhead and over-applied overhead calculation:
Since thepredetermined overhead rateis established before a period begins and is based entirely on estimated data, the overhead cost applied towork in process (WIP)will generally differ from the amount of overhead cost actually incurred during a period.Click here to read full article.