Summary The Manager and Management Accounting

CHAPTER 1: THE MANAGER AND MANAGEMENT ACCOUNTING


Document Type : Book Summary
Source : Cost Accounting: A Managerial Emphasis 15th Edition by Charles T.
Horngren, Srikant M. Datar, and Madhav V. Rajan




Learning Objective 1 : Distinguish Financial Accounting from Management
Accounting
1. Purpose of Information:
 Management accounting helps managers making decisions to fulfill the
organization goals; while
 Financial accounting communicates the organization’s financial position to
external parties.
2. Primary Users:
 Management accounting report is primarily used by managers of the organization;
while
 Financial accounting report is primarily used by external parties.
3. Focus and Emphasis:
 Management accounting is future-oriented; while
 Financial accounting is past-oriented.
4. Rules of Measurement and Reporting:
 Management accounting reporting follows internal measures and rules, and is
based on cost-benefit analysis; while
 Financial accounting reporting is based on standard rules and certified by external
auditors.
5. Time Span and Type of Reports:
 Management accounting reporting has various time span, from hourly to 15 to 20
years information, with various types of information (i.e. financial and non-
financial information on products, departments, territories, and strategies), while
 Financial accounting reporting has time span of annual and quarterly, with
information primarily focusing on the company as a whole.