Question

1. Distinguish between managerial and financial accounting
   • Primary Users of Reports
   • Types and frequency of reports (examples)
   • Purpose of Reports ( examples)
2. What is the value chain? example

Answer 1

In general financial accounting refers to Accounting information into financial statements, while managerial accounting refer to internal processes used to account for business transactions. There are a number of difference between financial and managerial accounting. Which fall into the following categories

Aggregation : financial accounting reports on the results of entire business. Managerial accounting almost always reports at a more detailed level such profit by product, product line, customer, and geographic region.

Efficiency: financial accounting reports on the profitablity of business, whereas managerial accounting reports on specifically what is causing problem and how to fix them

Proven information: financial accounting requires that records be kept with considerable precision, which is needed to prove that the financial statements are correct. Managerial accounting frequently deals with estimates, Rather than proven and variable facts

Reporting focus: financial accounting is oriented towards the creation of financial statements,which distributed between both internal and outside of the company. Managerial accounting is more concerned with operation reports,which are distribution only within the companies

Standards: financial accounting should comply with various Accounting standards , whereas managerial accounting doesn't have to comply with any standards.

AND SOME OTHER DIFFERENCE ARE ALSO THERE WHICH ARE

systems

Time period

Timing

Valuation

Primary users

The primary users of financial accounting are the external users, shareholders, investors, creditors, lenders and government

Shareholders are using financial information to know about their investment

Investors use financial information to know in which organization they should invest and to look how was the organization performance in past so that they decided whether to invest or not

Creditors and lenders use financial information to see how is the financial position of the company and does it able to meet it's obligation.

Frequency of reports

Financial statements are usually furnished monthly, quarterly and annually eg audit report quarterly, annual

Management Accounting reports are prepared as the need arises

Purpose of reports

Financial reporting are general purpose financial statements which should issue for it's stake holders eg profit or loss statement, statement of financial position, cash flows statement,sta statements of changes in equity

Managerial accounting report are issued and used for internal purpose eg budget statements

Value chain

A Value chain is a series of activities or processes that aims at creating and adding value to an article at every step during the production process

Value chain business activities are decided into two categories which are primary activities and secondary or supporting activities

Primary activities are

Inbound logistics

Operations

Outbound logistics

Market and sales

Services

Supporting activities

Infrastructure

Human resource management

Technology development