Question

1. Who are the primarily users of financial accounting vs. management accounting. 5

2. Name three characteristics of financial reports vs. managerial reports include in your answer 6

a- the type of report that is issued

b- the report format used and who determines it

c- the content of the report and who approves it

3. Explain the 3 primary functions of managerial accounting 3

Hint: the first one is planning.

4. Name and explain the three characteristics that make a report valuable to a user of management reports. 6

Answer 1

1. primary users of financial accounting are generally external., for example, government, creditors, lenders, etc, whereas that of management accounting are internal users like managers, investors, employees, etc.

2. three characteristics of financial reports vs. managerial reports are as follows-

CHARACTERISTICS	FINANCIAL REPORTS	MANAGERIAL REPORTS
A.type of report	financial statements like balance sheets, income statements, cash flow statements, etc.	internal reports like cost sheets etc.
B.format and who determines it	standard format determined by generally accepted accounting principals	flexible or non-standardized format determined by its users.
C.content and who approves it	pertains to business as a whole and is highly aggregated approved by independent auditors.	pertains to subunits of business and is detailed in a way to make decisions. Generally, no independent approval required.

3. primary functions of managerial accounting are-

*planning- Planning is formulating short term and long-term plans and actions to achieve a particular end.

* organizing- organizing is a process of establishing an organizational framework and assigning responsibility to people working in an organization for achieving business goals and objectives. it includes communication, leadership, and motivation.

*controlling- Control is the process of monitoring, measuring, evaluating and correcting actual results so that they meet the desired goals. Control is accom­plished with the use of feedback.

4. 3 characteristics that make report valuable to a user of management are:

A. Comparability

Sometimes a report is prepared with some comparative information. In this case, standard information is compared with actual information. If not so, current year information is compared with last year information. The main objective of comparability is to highlight significant variations.

B. Consistency

A report should be prepared for many years on the basis of the same accounting principles and concepts used for collecting, classifying, tabulating and presenting the information. The usage of report is increased through consistency.

    C. Precise and Accurate (materiality)

A report should be precise, accurate and specific. It shall avoid unnecessary information. It shall be simple and neat.