You have recently hired a new assistant, Susan Thompson, business and finance assignment help

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Business Finance

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You have recently hired a new assistant, Susan Thompson, who previously worked in a financial accounting office preparing journal entries, which provide you with a recording of the day-to-day activities of the company and financial statements (income statement, statement of owners' equity balance sheet, and cash flow statement). Although your new assistant has experience with and fully understands financial accounting, she has no experience with managerial accounting.

Part 1

In a memo to your new assistant, Susan Thompson, complete the following:

  • Explain to her the similarities and differences between financial and managerial accounting.
  • Provide examples of managerial accounting reports that she could expect to see within EEC, and explain how management might use the information to make decisions.
    • Keep in mind that although the income statement, the statement of owners’ equity balance sheet, and the cash flow statement are generated in financial accounting, they are used to develop all of your managerial accounting reports.
    • Examples of a few of those reports are the horizontal analyzes, vertical analyzes, and ratios.

Part 2

In a memo to the board of directors, discuss the information found in each of the following financial statements, and describe how accounting information is used by managers for planning and control:

  • Balance sheet
  • Income statement
  • Statement of cash flows
  • Statement of stockholders’ equity
1,750 Words 

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Explanation & Answer

Running head: MANAGEMENT ACCOUNTING

Management Accounting
Name
Institution

1

MANAGEMENT ACCOUNTING

2

Management Accounting
Part 1
A Memo to New Assistant, Susan Thompsom
In this memo, I discuss similarities and differences between financial and managerial accounting, and
examples of managerial accounting reports that she could expect to see within EEC,

Similarities and differences of financial and management accounting
Financial accounting and management accounting are similar and vary at the same time.
To begin with, both are similar in that they deal with business as well as economic events.
Additionally, both methods quantify business activities and transactions. Furthermore, they
involve preparation of financial statements, for instance, cash flows, income statements, and
statement of financial performance (Weygandt, Kimmel, & Kieso, 2009). Another similarity is
that both use similar accounting information system in reporting business transactions.
Moreover, the reports analyzed from management accounting as well as financial accounting use
the same data within an organization. Lastly, financial and management accounting is similar in
determining and measuring cost, their assigning of various costs to accounting periods as well as
allocation to various departments.
On the contrary, financial accounting and management accounting are different. While
financial accounting main objective is disclosing business end results and financial condition as
at a certain date, the management accounting main objective is helping management by offering
information which is used for planning, setting goals and evaluating them.

MANAGEMENT ACCOUNTING

3

Another difference is from the user of their information. External parties like shareholders
coupled with investors are the main users of financial accounting information while internal
users like managers as well as employees are the key users of management accounting
information.
Moreover, rules followed by both methods are different. Financial accounting, for
instance, applies GAAP or IFRS regulations (Stolowy, & Lebas, 2006). Additionally, all
companies must abide by the universal legal requirement of financial accounting standards.
Management accounting, on the contrary, use internal rules of the organization and are not
subjected to legal requirements.
Additionally, the focus of financial and management accounting vary. Financial
accounting focus is historical in nature, reporting prior quarters or the year. It is important to note
that financial accounting reports are prepared at the end of a specified time for example, monthly
or semi-annually. In cont...


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