Classroom posts - 1 Various parts of an organization...

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1. Various parts of an organization need different types of accounting information. Internal managers and supervisors mainly use management accounting information. Management accounting information is operational related data that is provided to managers, and contains current financial data that assists managers in making short and long term decisions. Financial accounting information is financial information that is provided to both internal and external parties and primarily focuses on the four main financial statements. These reports give a big picture view of the past, present and future of the company to stockholders, lenders, and various other external parties. 2. When a manufacturing company is ready to produce a product, they look to their inventory accounts to see if they have enough materials to start production. Normally a manufacturing organization has three types of inventory accounts that they use. a. The first account is the Materials Inventory Account. This account contains the materials which have not entered production (also known as raw materials) b. The second account is the Work in Process Account. This account contains the materials that have entered production, but have not been turned into the final product. c. The third, and last, account is the Finished Goods Account. This account contains all the completed goods that are ready to be sold. (The number in this account represents the inventory entry in the balance sheet). 3. Generally accepted accounting principles (GAAP) are a set of standards, principles, and procedures that financial accounting information (financial statements) should conform to. These principles are meant to ensure consistency in an organization’s financial statements, and provide an easier way for internal and external customers to analyze and compare different companies. Unlike financial information management accounting information does not have to conform to GAAP or any other set of prescribed standards. While this information has no conformity standards it should still be collected in an ethical manner and not be manipulated to mislead or misinform. To help ensure that management accounting information is collected and provided properly there are three main principles that should guide an organization when they are designing the system. The first principle is that the information should be used to help assign decision making authority over the company’s assets. Secondly the information that is produced should be useful in the organization’s planning and decision making processes. And last This information should be used to evaluate, monitor, and even reward performances. 4. Whether a business is large or small the need for managerial accounting information drives the decisions a business makes. Managerial accounting information provides management with information so they are able to make knowledgeable decisions regarding the products they sell, how they sell them, and who they sell them to.
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