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Manageral accounting

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Al-Rahim Textile Industries
Al-Rahim Textile Industries

Managerial accounting provides internal reports and analyses to help managers plan, evaluate, and control operations. It identifies, measures, analyzes, interprets, and communicates financial and non-financial information important for internal decision making. Managerial accounting focuses on future outcomes and generates reports on a frequent, informal basis for internal users like executives and department managers. Unlike financial accounting which has standardized reporting and focuses on the past, managerial accounting tailors reports to specific organizational needs and timeframes.

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Definition of Managerial Accounting     The process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. This is also known as "cost accounting." Managerial accounting, an internal business function that identifies, measures, records, and analyzes financial information, also includes budgets, forecasting, cost allocation, and projected financial reports. Differences in accounting methods depend on a company’s business operations and its industry. The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions. Unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting generates monthly or weekly reports for an organization's internal audiences such as department managers and the chief executive officer. These reports typically show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and accounts receivable, outstanding debts, raw material and inventory, and may also include trend charts, variance analysis, and other statistics. Also called managerial accounting. Comparison chart Format: Planning and control: External Vs. Internal: Focus: Users: department: Financial Accounting Financial accounts are supposed to be in accordance with a specific format by IAS so that financial accounts of different organizations can be easily compared. Financial accounting helps in making investment decision, in credit rating. A financial accounting system produces information that is used by parties external to the organization, such as shareholders, bank and creditors. Financial accounting focuses on history. Financial accounting reports are primarily used by external users, such as shareholders, bank and creditors. preparing financial accounting is the work of finance department. Management Accounting No specific format is designed for management accounting systems. Management Accounting helps management to record, plan and control activities to aid decision-making process. A management accounting system produces information that is used within an organization, by managers and employees. Management accounting focuses on future. Management accounting reports are exclusively used by internal users viz. managers and employees. managerial accounting is not specific task of particular department. coordiantion of all department creates management accounting.
report frequency: Mandatory Vs. optional: well defined - annually, semi-annually Time span: Financial accounting statements are required to be produced for the period of 12 months. Most financial accounting information is of a monetary nature. Monetary Vs. non-monetary: Preparing financial accounting reports are mandatory especially for limited companies. Objectives: The main objectives of financial accountng are :i)to disclose the end results of the business, and ii)to depect the financial condition of the business on a particular date. Legal/rules: Drafted according to GAAP - General Accepted Accounting Procedure. Follows a full process of recording, classifying, and summmarising for the purpose of analysis and interpretation of the finnancial information. Accounting process: Center of importance: the financial accounitng , the origin of preservation of knowledge gives emphasis on recording keeeping on a whole firm basis for the purpose of decisions by all the users of accouning information, both external and internal. segment reporting: Describe whole organization. whenever needed - daily, weekly, monthly. There are no legal requirements to prepare reports on management accounting. No specific time span is fixed for producing financial statements. Management accounting information may be monetary or alternatively non monetary. The main objectives of Management Accounting are to help management by providing information that used by management to plan, evaluate, and control. Drafted according to management suitability. Cost accounts are not preserved under Management Accounting but analyses necessary data from financial statements and cost ledgers. Management accounting uses cost data for provision of information for strategic management decisions. It is mainly concerned with the provision of help to the managers to asses them in the process of decision making and design business strategies. Only covered part of organization (dept) - production department.

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Manageral accounting

  • 1. Definition of Managerial Accounting ï‚· ï‚· ï‚· ï‚· The process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. This is also known as "cost accounting." Managerial accounting, an internal business function that identifies, measures, records, and analyzes financial information, also includes budgets, forecasting, cost allocation, and projected financial reports. Differences in accounting methods depend on a company’s business operations and its industry. The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions. Unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting generates monthly or weekly reports for an organization's internal audiences such as department managers and the chief executive officer. These reports typically show the amount of available cash, sales revenue generated, amount of orders in hand, state of accounts payable and accounts receivable, outstanding debts, raw material and inventory, and may also include trend charts, variance analysis, and other statistics. Also called managerial accounting. Comparison chart Format: Planning and control: External Vs. Internal: Focus: Users: department: Financial Accounting Financial accounts are supposed to be in accordance with a specific format by IAS so that financial accounts of different organizations can be easily compared. Financial accounting helps in making investment decision, in credit rating. A financial accounting system produces information that is used by parties external to the organization, such as shareholders, bank and creditors. Financial accounting focuses on history. Financial accounting reports are primarily used by external users, such as shareholders, bank and creditors. preparing financial accounting is the work of finance department. Management Accounting No specific format is designed for management accounting systems. Management Accounting helps management to record, plan and control activities to aid decision-making process. A management accounting system produces information that is used within an organization, by managers and employees. Management accounting focuses on future. Management accounting reports are exclusively used by internal users viz. managers and employees. managerial accounting is not specific task of particular department. coordiantion of all department creates management accounting.
  • 2. report frequency: Mandatory Vs. optional: well defined - annually, semi-annually Time span: Financial accounting statements are required to be produced for the period of 12 months. Most financial accounting information is of a monetary nature. Monetary Vs. non-monetary: Preparing financial accounting reports are mandatory especially for limited companies. Objectives: The main objectives of financial accountng are :i)to disclose the end results of the business, and ii)to depect the financial condition of the business on a particular date. Legal/rules: Drafted according to GAAP - General Accepted Accounting Procedure. Follows a full process of recording, classifying, and summmarising for the purpose of analysis and interpretation of the finnancial information. Accounting process: Center of importance: the financial accounitng , the origin of preservation of knowledge gives emphasis on recording keeeping on a whole firm basis for the purpose of decisions by all the users of accouning information, both external and internal. segment reporting: Describe whole organization. whenever needed - daily, weekly, monthly. There are no legal requirements to prepare reports on management accounting. No specific time span is fixed for producing financial statements. Management accounting information may be monetary or alternatively non monetary. The main objectives of Management Accounting are to help management by providing information that used by management to plan, evaluate, and control. Drafted according to management suitability. Cost accounts are not preserved under Management Accounting but analyses necessary data from financial statements and cost ledgers. Management accounting uses cost data for provision of information for strategic management decisions. It is mainly concerned with the provision of help to the managers to asses them in the process of decision making and design business strategies. Only covered part of organization (dept) - production department.