What Are The Two Major Uses Of Managerial Accounting...

1. Explain the two major uses of managerial accounting information. Operational planning (being prepared for today) †¢ to ensure that an organization will have the necessary financial resources to function throughout the year, budgets must be created. In the budgeting process money is allocated to various departments of the organization for a specified time period. In most cases budgets are created on an annual basis, typically just before a new fiscal year begins. To create a budget management must look at past business performance, prior-year sales, revenues, expenses, and other overhead operating costs. These costs are typically carried forward in order to predict the future of the business. Ultimately all of the information and planning results in a budget. In most cases different departments within an organization will have different budgets based upon their needs but they will all be incorporated into an overall corporate budget. Strategic planning (planning for tomorrow) †¢ many of the techniques used in strategic planning are quite similar to those used in the budgeting process. These techniques are intended to help make the future more predictable. The purpose for employing these techniques is to determine whether or not a plan for expansion or growth is actually feasible. Organizations must engage in strategic planning every time they grow or expand, acquire a competitor or are acquired by competitor. They will typically use historical trends, industry trends, andShow MoreRelatedManagerial Accounting1152 Words   |  5 PagesManagerial Accounting 12/3/15 Managerial Accounting Accounting is a crucial part in running a business. There are various forms of accounting that can be used, it is very important to know which technique is best to use for what companies. Once you figure out a particular technique to use, it is important to keep an open mind if there are any changes that need to take place in the business. By keeping an open mind helps the business adjust and be able to make the right decisions. Every businessRead MoreDifference between Financial and Managerial Accounting 637 Words   |  3 PagesThe primary difference between financial and managerial accounting is that financial accounting is used for external members of the company; they do not control or run the businesses’ operations. An example of external members would be customers and shareholders of the business. On the other hand, managerial accounting is used for internal members in the company such as managers and officers. The internal members use managerial accounting to increas e efficiency and effectiveness within their companyRead MoreThe Differences Between Financial And Managerial Accounting1320 Words   |  6 PagesRegardless of what industry an organization may be a part of, accounting plays a vital role in everyday decision making. Without the field of accounting, companies and organizations would not be nearly as efficient, productive and successful as they are today. Accounting serves many purposes for an organization, whether it is financial or managerial. But, not all forms of accounting are the same. With that being said, to better understand the differences between financial and managerial accounting, it isRead MoreManagement Accounting : Financial And Non Financial Information1120 Words   |  5 PagesINTRODUCTION:- Management Accounting refers to the preparation of financial and non-financial information for the use of management of the company. It is also termed as managerial accounting. The information provided by it is helpful in making policies and strategies, budgeting,, forecasting future plans, making comparisons and evaluating performance of the management. The reports produced by management accounting are used by the internal management (managers and employees) of the organization andRead MoreFinancial and Managerial Accounting628 Words   |  3 PagesBoth financial and managerial accounting analyze economic data, however the major differences between the two strands include; user groups, information type, regulatory control and reporting frequency (Atrill and McLaney, 2012) User Groups: Financial accounting mostly provides information for external stakeholders such as shareholders, lending institutions, prospective investors and creditors, whereas managerial accounting mostly make available information for internal users such as managers andRead MoreAcc 11410 Words   |  6 Pagesperformed in an organization, among which accounting is one of them. Define the accounting function and discuss how it differs from double-entry bookkeeping. Accountants analyze and interpret financial information, prepare financial statements, conduct audits, design accounting systems, prepare special business and financial studies, prepare forecasts and budgets, and provide tax services. Double-entry bookkeeping records the economic activities of a business. Accounting includes bookkeeping but duties areRead MoreThe Entity Concept Of Accounting1520 Words   |  7 PagesThe Entity Concept in accounting states transactions associated with one business or entity must be separate from additional businesses owned by the same person. This requires separate books, accounts, assets, liabilities and anything separately associated with each business. This concept is imperative as it is required by federal law and GAAP principals. B. Reliability Principal The reliability principle is the concept of only recording those transactions in the accounting system that you can verifyRead MoreAccounting1024 Words   |  5 Pageswhich accounting is one of them. Define the accounting function and discuss how it differs from double-entry bookkeeping. Answer: According to the Dictionary of Accounting Terms, Accounting is defined as a one step process of recording, measuring, interpreting and communicating financial data by preparing financial statements in order to reflect financial condition and operating performance whereas Double-entry bookkeeping is the record of transactions that require entries in at least two accountsRead MoreHomework chapter 1 Essay1675 Words   |  7 PagesChapter 1 1. How does managerial accounting differ from financial accounting? The essential difference between managerial accounting and financial accounting is that managerial accounting attends the needs of managers inside the organization, while financial accounting serves the needs of those outside the organization. There are also specific guidelines that are used (GAAP/IFRS) in financial accounting and is mandatory whereas there are no guidelines in managerial accounting and is not mandatoryRead MoreBus 630 Week 1 Discussion1014 Words   |  5 PagesBUS630 WEEK 1 Ashford University MANAGERIAL ACCOUNTING: This week students will: 1. Explain the primary ethical responsibilities of the management accountant. 2. Illustrate the key principles of managerial accounting including cost concepts. 3. Distinguish between the behavior of variable and fixed cost. 4. Explain the significance of cost behavior to decision making and control. 5. Determine the necessary sales in unit and dollars to break-even or attain desired profit