This site explains
some of the most important concepts of financial and
managerial accounting. This site is completely free
What is Managerial Accounting:
Managerial accounting is
concerned with providing information to managers - that is, people inside
an organization who direct and control its operation. Managerial accounting
provides the essential data with which the organizations are actually
run. Managerial accounting is also termed as management accounting
What is Financial Accounting:
Financial accounting is
concerned with providing information to stockholders, creditors, and
others who are outside an organization. Financial accounting provides the scorecard by
which a company's overall past performance is judged by outsiders.
Managerial accountants prepare a variety of reports. Some reports focus
on how well managers or business units have performed-comparing actual
results to plans and to benchmarks. Some reports provide timely,
frequent updates on key indicators such as orders received, order
backlog, capacity utilization, and sales. Other analytical reports are
prepared as needed to investigate specific problems such as a decline
in the profitability of a product line. And yet other reports analyze a
developing business situation or opportunity. In contrast, financial
accounting is oriented toward producing a limited set of specific
prescribed annual and quarterly financial statements in accordance with
Generally Accepted Accounting Principles (GAAP). (Ray
H. Garrison, Eric W Noreen).
Frequently Visited Managerial Accounting Articles:
Between Financial and Managerial
Financial accounting reports are prepared
for the use of external parties such as shareholders and creditors, whereas
managerial accounting reports are prepared for managers inside the
organization...... Click here to read full article.
Just-in-Time (JIT) Manufacturing
and Inventory Control System:
Traditionally manufacturers have forecasted demand for their products into
the future and then have attempted to smooth out production to meet that
forecasted demand. At the same time, they have also attempted to keep
everyone as busy as possible producing output so as to maximize "efficiency"
and (hopefully) reduce costs......Click
here to read full article.
Product Costs Versus Period Costs:
In addition to the distinction
between manufacturing and non-manufacturing costs, there are other ways to look
at costs. Costs can also be classified as either
product cost or period cost. To
understand the difference between product costs and period costs, we must first
refresh our understanding of the matching
principle from financial accounting......
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Under-applied overhead and over-applied overhead calculation:
predetermined overhead rate is established before a period
begins and is based entirely on estimated data, the overhead cost applied to
work in process (WIP) will generally differ from the amount of overhead cost
actually incurred during a period.
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