Not everything that counts can be counted, and not everything that can be counted counts. ” Albert Einstein http://www. brainyquote. com/quotes/authors/a/albert_einstein. html Users of Accounting Information ? Users of accounting information can be divided in two categories: parties within the organisation, Internal managers mainly and shareholders 2. External parties such as creditors and regulatory agencies, outside the organisation. Branches of Accounting
? It is possible to distinguish between two branches of accounting, that reflect the internal & external users of accounting information. 1. Management accounting is concerned with the provision of information to people within the organisation to help them make better decisions. ccounting is concerned with the Financial provision of information to external parties outside the organisation. Financial and Managerial Accounting: Seven Key Differences Financial Accounting 1. Users 2. Time focus 3. Verifiability versus relevance 4. Precision versus timeliness 5. Subject 6. Rules 7.
Requirement External persons who make financial decisions Historical perspective Emphasis on objectivity and verifiability Emphasis on precision Primary focus is on companywide reports Must follow GAAP / IFRS and prescribed formats Mandatory for external reports Managerial Accounting Managers who plan for and control an organization Future emphasis Emphasis on relevance Emphasis on timeliness Focus on segment reports Not bound by GAAP / IFRS or any prescribed format Not Mandatory Activities of Managerial Accounting Planning Controlling Decision Making Activities of Managerial Accounting O Managerial accounting helps managers perform three vital activities – planning, controlling and decision making.
The Coursework on Accounting And Bookkeeping Financial Information Accountants
The Financial Accountant is the focal point for the financial accounting process of the company, ensuring the daily financial controls operate as planned as well as making a major contribution to internal and external reporting requirements. Accountants must also be able to draw up a set of financial records and prescribe the system of accounts that will most easily give the desired information; ...
Planning involves establishing and specifying goals how to achieve them. involves gathering to ensure Controlling feedback that the plan is being properly executed or modified as circumstances change. Decision making involves selecting a course of action from competing alternatives. Forward-looking Perspective • Budgeting systems turn managers’ perspectives forward. A forward-looking perspective enables gaps managers to be in a better position to exploit.
It also enables them to anticipate and take steps risks to eliminate or reduce their severity. Forward Looking Perspective Practical example: Failure to anticipate problems Phil Harrison, President of Sony Computer Entertainment FORCED TO STEP DOWN Forward Looking Perspective Practical example: Ability to exploit opportunities HUGE PROFITS “Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called the present .
