The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
Subject: Management Accounting
Management Accounting or Managerial accounting assists mangers in the day to day execution of normal activities as well as for the more important task of decision making or formulatingstrategies.In essence, this branch of accounting identifies, measures, analyzes, interprets data andcommunicates information for the sole purpose of monitoring and control of activities to achievethe cost optimization goal.
How is Management Accounting different from Financial Accounting?Purpose:
Management accounting is basically for the people within an organization for thepurpose of planning and control while financial accounting is mainly for those outside it, such asshareholders and creditors
Financial accounting is a statutory requirement while management accounting is not.
Financial accounting covers the entire organization while management accounting may beconcerned with particular products or cost centers.
Statements and Reports:
Financial Accounting reports the results of a financial year in the formof Balance Sheet, Cash Flow Statement and Income Statement. The reports generated by Management Accounting are Sales Forecasting reports, Budget analysis and comparative analysis,Feasibility studies, Merger and consolidation reports
Financial accountants always follow Generally Accepted AccountingPrinciples set by professional bodies in each country or International Financial ReportingStandards (IFRS), Management or managerial accountants make use of procedures and processesare more individualistic in nature and differ from company to company.