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Chapter 1 - Chapter 1 Managerial vs Financial Accounting...

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Chapter 1 Managerial vs. Financial Accounting
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Managerial accounting is concerned with providing information to managers-that is, the people inside an organization who direct and control its operations. Financial accounting is concerned with providing information to stockholders, creditors, and others who are outside the organization. Managerial vs. Financial
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Comparison of Financial and Managerial Accounting Financial Accounting Managerial Accounting 1. Users External persons who Managers who plan for make financial decisions and control an organization 2. Time focus Historical perspective Future emphasis 3. Verifiability Emphasis on Emphasis on relevance versus relevance verifiability for planning and control 4. Precision versus Emphasis on Emphasis on timeliness precision timeliness 5. Subject Primary focus is on Focuses on segments the whole organization of an organization 6. GAAP Must follow GAAP Need not follow GAAP and prescribed formats or any prescribed format 7. Requirement Mandatory for Not external reports Mandatory 2-3
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Financial Accounting Reports past results Aggregates results of entire company Uses Generally Accepted Accounting Principles (GAAP) Emphasizes stewardship of resources. Managerial Accounting Is more forward- looking Reports on products, segments and divisions Does not have to follow GAAP, but does act ethically Emphasizes stewardship of Managerial vs. Financial
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Multiple Choice Questions!!!!
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