DISCUSSION QUESTIONS

DIRECTION: Write your answers on a yellow paper (for offline students) or

in a word document (for online students. The file name of the word
document should be as follows: eCOST_Week01_<Last Name><First
Name>

1. Define financial accounting

Financial accounting is the field of accounting concerned with the summary,

analysis and reporting of financial transactions related to a business. This
involves the preparation of financial statements available for public use.

2. Define management accounting.

Management accounting is the process of preparing reports about business

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operations that help managers make short-term and long-term decisions. It
helps a business pursue its goals by identifying, measuring, analyzing,

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interpreting and communicating information to managers.

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3. How does management accounting serve both external users and
internal users?
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Financial accounting provides historical financial information for
external users in accordance with U.S. GAAP. Managerial accounting
provides detailed financial and non-financial information for internal users
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who use the information for decision making, planning, and control
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purposes.
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4. What are the differences between financial accounting and

managerial accounting?
The difference between financial and managerial accounting is that
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financial accounting is the collection of accounting data to create financial

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statements, while managerial accounting is the internal processing used to

account for business transactions.
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5. Why is managerial accounting information more " future oriented”

than financial accounting?
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Managerial accounting is more future-oriented. Since managerial

accounting information is associated with decision making, it should be
focused on helping make sound decisions with the best information
available at the time.

6. Discuss the relationships between goals, planning, and controls.

Planning and controlling are inter-related to each other. Planning sets
the goals for the organization and controlling ensures their
accomplishment. Planning decides the control process and controlling
provides sound basis for planning. In reality planning and controlling are
both dependent on each other.

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 7. Identify and define the three levels of planning.
There are three levels of strategic planning: Corporate, business, and
functional. Strategy may be planned at each level, but the plans for every level of
an organization should align to insure maximum unity of effort.

8. Differential job order costing from process costing.

Job order costing assigns costs to specific units or products. These units or
products are not individualized for the customer or event. Process costing
assigns costs to a mass quantity of a product or service.

9. What are the main characteristics of job order costing?

Characteristics of Job Costing

 Each job can be clearly distinguishable from other jobs.

 Job costing is used, where job is performed at the request of the customer.
 Job price is agreed with customer on the bases of cost estimation.
Separate record is kept for each job.

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 All cost related to job are collected on jobs cost sheet or job card.

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10. What are the main characteristics of process costing?
Process costing has certain characteristics of its own. The chief

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characteristics of process costing are:
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(1) The production of goods is continuous, except where the plant is shut-
down for repairs, until the final product.
(2) The finished product is the result of two or more processes.
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