How is managerial accounting different from financial accounting? Comment on the
ID: 2387401 • Letter: H
Question
How is managerial accounting different from financial accounting?Comment on the different needs and use of financial information for internal purposes.
The managerial accounting profession and its role in today’s business environment. How has it changed over time?
Comment on the Certified Management Accountant (CMA) designation.
Part II:
Explain the main differences between the absorption and contribution (behavioral, variable) income statements. Will net income always be the same under the two approaches? If not, explain the difference.
Comment specifically on why companies feel the need to create yet another income statement in a different format. What information can the company gleam from this approach which is helpful as a tool in the decision making process.
Explain situations in which break-even analysis can be a useful tool. Provide a specific example.
2 to 4 pages jnclude answers to all the questions listed above. Include references
Explanation / Answer
Key differences between financial accounting and managerial accounting are as follows: (a) Financial accounting reports are prepared for presentation to various stakeholders such as shareholders, loan lenders, creditors, however, managerial accounting reports are prepared for internal reporting between the managers of the concerned organization. (b) In financial accounting, the focus is more on presentation of past results, however, in managerial accounting, the focus is more on prediction of future results. (c) Financial accounting data should be 100% accurate. There should not be any discrepancy. However, for managerial accounting, the data are estimates and 100% accuracy is not required. (d) Financial accounting should be made using GAAP. However, managerial accounting is not necessary required to be complied with GAAP. (e) Financial accounting is mandatory, however, managerial accounting is not mandatory. Happy to help