Question

In: Accounting

distinguish financial accounting from management accounting and describe the set of business functions in the value...

distinguish financial accounting from management accounting and describe the set of business functions in the value chain and identify the dimensions of performance thar customers are expectinf of companies. (answer the question and give examples)

Solutions

Expert Solution

Unlike managerial accounting, financial accounting is governed by rules set out by the Financial Accounting Standards Board (FASB), an independent board made up of accounting professionals who determine and publicize the standards of financial accounting and reporting in the United States. Larger, publicly traded companies are also governed by the US Securities and Exchange Commission (SEC), in the form of the generally accepted accounting principles (GAAP), the common set of rules, standards, and procedures that publicly traded companies must follow when they are composing their financial statements.

Financial accounting provides information to enable stockholders, creditors, and other stakeholders to make informed decisions. This information can be used to evaluate and make decisions for an individual company or to compare two or more companies. However, the information provided by financial accounting is primarily historical and therefore is not sufficient and is often synthesized too late to be overly useful to management. Managerial accounting has a more specific focus, and the information is more detailed and timelier. Managerial accounting is not governed by GAAP, so there is unending flexibility in the types of reports and information gathered. Managerial accountants regularly calculate and manage “what-if” scenarios to help managers make decisions and plan for future business needs. Thus, managerial accounting focuses more on the future, while financial accounting focuses on reporting what has already happened. In addition, managerial accounting uses nonfinancial data, whereas financial accounting relies solely on financial data.

For example, Daryn’s Dairy makes many different organic dairy products. Daryn’s managers need to track their costs for certain jobs. One of the company’s top-selling ice creams is their seasonal variety; a new flavor is introduced every three months and sold for only a six-month period. The cost of these specialty ice creams is different from the cost of the standard flavors for reasons such as the unique or expensive ingredients and the specialty packaging. Daryn wants to compare the costs involved in making the specialty ice cream and those involved in making the standard flavors of ice cream. This analysis will require that Daryn track not only the cost of materials that go into the product, but also the labor hours and cost of the labor, plus other costs, known as overhead costs (rent, electricity, insurance, etc.), that are incurred in producing the various ice creams. Once the total costs for both the specialty ice cream and the standard flavored ice cream are known, the cost per unit can be determined for each type. These types of analyses help a company evaluate how to set pricing, evaluate the need for new or substitute ingredients, manage product additions and deletions, and make many other decisions.


Related Solutions

2       Distinguish between management accounting and financial accounting. Hint: -          Meaning of Managerial Accounting and Financial...
2       Distinguish between management accounting and financial accounting. Hint: -          Meaning of Managerial Accounting and Financial Accounting -          Definitions of Managerial Accounting and Financial Accounting -          Differences between ‘Financial Accounting’ and ‘Managerial Accounting’ -          Conclusion
Distinguish the similarities and differences in financial accounting from managerial accounting and how is each type...
Distinguish the similarities and differences in financial accounting from managerial accounting and how is each type of accounting used.
Describe the differences between financial accounting and management accounting.in hospital management ?
Describe the differences between financial accounting and management accounting.in hospital management ?
Please explain how management accounting differs from financial accounting.​
Please explain how management accounting differs from financial accounting.​
Use 3 paragraphs: Briefly describe and distinguish the 'planning' and 'control' aspects of management accounting. Give...
Use 3 paragraphs: Briefly describe and distinguish the 'planning' and 'control' aspects of management accounting. Give examples of how management accounting information is used for both planning and control purposes in your organization.
Distinguish and explain the differences between business and financial risk and provide an example from a...
Distinguish and explain the differences between business and financial risk and provide an example from a publicly traded company. Use specific examples and citations to support your assertion for business or financial risk. Be sure to cite your source(s).
Distinguish and explain the differences between business and financial risk and provide an example from a...
Distinguish and explain the differences between business and financial risk and provide an example from a publicly traded company
Discuss the role of four business functions at Nike operations management marketing accounting and finance human...
Discuss the role of four business functions at Nike operations management marketing accounting and finance human resource management Give at least two innovation examples for each business function at Nike
Financial accounting is designed to measure directly the value of a business enterprise. Comment.
Financial accounting is designed to measure directly the value of a business enterprise. Comment.
Describe into detail how to set up and design a cost and management accounting systems bearing...
Describe into detail how to set up and design a cost and management accounting systems bearing in mind costing methods and techniques in cost ascertainment for a business. Which will ultimately help the business entity in costing and pricing of its products/services. Select a business of your choice
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT