Managerial and Financial Accounting
Managerial and Financial Accounting
Managerial and Financial
Accounting Accounting can be broken down into many different categories and areas. Managerial and financial accounting is only two parts of the cost accounting system. With in these two different aspects of accounting there are many similarities and differences not only between these categories but also in their rules and regulations, management information and reporting requirements as well. The certifications of accountants are also differentiated in these two categories, CMA and CPA. No matter what category you place an accountant in; the job is crucial in the business world.
Managerial vs. Financial
Managerial accounting is part of a company's management-information system, which provides accounting and other quantitative data to managers at all levels inside the organization. The preparation of information is used for decision making, planning, directing and controlling a company's operations. Financial accounting is the use of accounting information for reporting to parties outside the company. The preparation of information is used for published financial statements and other financial reports. The focus of managerial accounting is on the needs of managers within the company rather than the interested parties outside the company. Some of the users of financial accounting information are current and prospective stockholders, lenders and investment analysts. The main similarity between the both is that they both draw upon data from an organizations basic accounting system, mainly the cost accounting system.
Rules and Regulations
Managerial accounting does not require regulations and is unregulated because it is intended only for management within the company. Financial accounting requires regulation and must conform to widely accepted set of rules, standards and procedures known as the general accepted accounting principles (GAAP). They are regulated by the Financial Accounting Standards Board (FASB) as well as the Securities and Exchange Commission (SEC). The rules of accountants also depend on their own professional standards as well as their professional ethical standards.
Management and Reporting
Both managerial and financial accountants have responsibility to management in competence, confidentiality, integrity and objectivity. Managerial accounting's reports often focus on subunits within the organization, such as departments, divisions, geographical regions or product lines. These reports are based on combined historical data, estimates and projections of future events and "may be very detailed" (2004). Financial accounting reports focus on the enterprise in its entirety. These reports are based almost exclusively on historical transaction data.
CMA and CPA
Managerial accounts can earn a professional certification. A Certified...