CHAPTER 1THE ACCOUNTANT’S ROLE IN THE ORGANIZATION1-1Management accountingmeasures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization. It focuses on internal reporting.Financial accountingfocuses on reporting to external parties. It measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP).Other differences include (1) management accounting emphasizes the future, (2) management accounting influences the behavior of managers and other employees, and (3) management accounting is not restricted by Generally Accepted Accounting Principles.1-3Management accountants can help to formulate strategy by providing information about the sources of competitive advantage—for example, the cost, productivity, or efficiency advantage of their company relative to competitors or the premium prices a company can charge relative to the costs of adding features that make its products or services distinctive.
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