Friday, May 20, 2022

Financial Accounting vs Managerial Accounting

Hello my name is Professor G and I am the facilitator for this online managerial accounting course I made two videos for chapter one and this is the first of the videos and this concerns financial accounting versus managerial accounting before we get into the subject there is a student learning outcome that's in your syllabus and it .

Has two parts the first is describe the differences between financial and managerial accounting and the second part is evaluate the role of the management accountant so you can see what this video is going to cover in chapter one exhibit 1-1 they have a list of the differences and those differences cover these seven areas right here and .

So for the first one its users and you probably remember from your financial accounting course that the users are external parties such as stockholders or creditors now in managerial accounting we're talking about the users being insiders and primarily the the managers who plan in control of the operations of an organization okay the second area has .

To do with time focus and in financial accounting that annual report provided an historical perspective of how the business was doing and the annual report went back three years in fact in the back of the report you probably had a schedule went back a good 10 or maybe 20 years in managerial accounting the emphasis is on the future you'll see .

Several chapters in this textbook that has to do with budgeting the third area is verifiability versus relevance and in financial accounting you probably remember what auditors do they take a look at transactions and then they find source documents to support those transactions but over in managerial accounting the .

Emphasis is on satisfying management needs it's whatever the managers need to run their business in the fourth area we're talking about precision versus timeliness when we say precision in financial accounting remember the auditors letter in the annual report the emphasis in that letter was on a fair report of operations and financial .

Positions the auditors said fair they didn't say absolutely accurate to the penny that's for sure over on the other side the emphasis is on getting the information to the managers when they need it and so very often yesterday's information has to be on the managers desk this morning the next area has to do with a subject .

Well the primary focus is on the company-wide reports in financially accounting and you probably remember that the parent corporation and its subsidiaries are all in one annual report where in managerial accounting the focus is on segment reports and when we use the word segments we mean region district department store product line .

Those kind of things the next has to do with rules oh you remember for financial accounting that was GAAP generally accepted accounting principles here in the United States and for international corporations it was the international financial reporting standards i FERS over on the other side managerial accounting you're going to .

Find they're not bound by any outside rules okay and number seven requirement well mandatory for external reports in financial accounting and the Securities and Exchange Commission had a lot to say about that over on the managers side nothing's mandatory although if you don't provide information to the managers you'll probably be fired .

Okay the next topic is the role of the manager Lacan well the first one is really obvious and that is the manager provides information to managers for use within an organization notice I didn't say use so the accountant is not going to make any of these management decisions that's what the managers do the accountant is providing a service to .

Those managers and the second thing is to report financial information to outsiders such as stockholders creditors and regulators the third one here is to send tax information to city state and federal agencies and the fourth thing is to maintain an ethical and reliable system of internal control I'd recommend that you take a look at exhibit 1-6 and .

In that exhibit there is the statement of ethical professional practice that will give you an idea of the ethics that managerial accountants should go by okay how to read chapter one well first off I want you to assume that you are already a manager where you work or where you hope to work anyway so you should be looking at this content .

Through a manager's eyes the next thing is imagine and imagine how the content of this chapter impacts your ability to plan control and make management decisions your the people that do this not the accountant okay and number three is study exhibit 1-5 to see how the rest of this book helps you learn the measurement skills needed in future .

Management positions okay enjoy reading the rest of chapter one again I'm professor G and I'm looking forward to facilitating your learning

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