Question

Q. Describe and demonstrate the five differences between managerial and financial accounting. Your answer should include: the difference, a real-world example of the difference and Internet research to support the difference.

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Q. Give at least ten different examples of the types of costs and/or revenue from the text. Your answer should include: The name of the cost/revenue, the definition, a real world example and Internet research to support the real world example.

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Q. Define Process Costing and Job Order Costing. Discuss at least five terms/concepts related to either/both of the costing methods. Giver real world examples to support you terms/concepts and include internet research.

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Answer 1

Difference between Financial accounting and management accounting

1. Result of the business is provided through financial accounting while reports on very detailed level are presented through management accounting.
2. Profitability of the company is reported in financial accounting, while managent accounting discuss about problem on specific issues.
3. In financial accounting it is needed that records are kept but management accounting is based on estimate.
4. A financial statement which is prepared under financial accounting is distributed both inside and outside of the company.Managent Accounting reports are distributed only within the company.
5. Under financial accounting we are required to follow various accounting standards but no such standard are required to follow under management accounting.
6. Financial accounting is mainly concerned about valuation of various assets and liability but in management accounting budget and forecast is prepared.
7. Financial accounting statements are prepared on the end of accounting period but management accounting reports are prepared very frequently.
8. Financial accounting is historical orientation while management accounting is future oriented.

Financial accounting reports are prepared for the use of external parties such as shareholders and creditors, whereas managerial accounting reports are prepared for managers inside the organization.

This contrast in basic orientation results in a number of major differences between financial and managerial accounting, even though both financial and managerial accounting often rely on the same underlying financial data. In addition to the to the differences in who the reports are prepared for, financial and managerial accounting also differ in their emphasis between the past and the future, in the type of data provided to users, and in several other ways