Chapter 15
Managerial accounting → provides information for the internal users
Managerial accounting includes the following:
Historical data, which provide objective measures of past operations
Estimated data, which provide subjective estimates about future decisions
Financial accounting → provides information for the external users
Objective: Information based on facts
Subjective: Information based on personal experience / personal opinion
Internal users
-Management
-Employees
External users
-Shareholders
-Creditors
-Government agencies
-The general public
Financial statements
Statement of cash flow, balance sheet, retained earnings statement, income statement
Managerial accounting reports
Production report, activity analysis, budget report
Financial statements Managerial accounting
reports
Users of information External users and company Management
management
Nature of information Objective Objective and subjective
Guidelines for preparation Prepared according to Prepared according to
GAAP management needs
Timeliness of reporting Prepared at fixed intervals Prepared at fixed intervals
and on an as-needed basis
Focus of reporting Company as a whole Company as a whole or
segment
Unlike financial statements prepared in financial accounting, managerial accounting reports
1
, do not always have to be:
- Prepared according to generally accepted accounting principles (GAAP) this is
because only one company uses the information.
- Prepared for the business as a whole. Most management reports are prepared for
products, projects, sale territories, or other segments of the company.
Organization chart
The operating structure of a company can be shown in an organization chart
Line responsibilities
A line department is directly involved in providing goods or service to customers
Staff responsibilities
A staff department providers services, assistance, and advice to the departments with line
responsibilities
Controller
In most companies the controller is the chief management accountant. The controller’s staff
consist of a variety of other accountants who are responsible for specialized accounting
functions
The management process
1.Planning
2.Directing
2
Managerial accounting → provides information for the internal users
Managerial accounting includes the following:
Historical data, which provide objective measures of past operations
Estimated data, which provide subjective estimates about future decisions
Financial accounting → provides information for the external users
Objective: Information based on facts
Subjective: Information based on personal experience / personal opinion
Internal users
-Management
-Employees
External users
-Shareholders
-Creditors
-Government agencies
-The general public
Financial statements
Statement of cash flow, balance sheet, retained earnings statement, income statement
Managerial accounting reports
Production report, activity analysis, budget report
Financial statements Managerial accounting
reports
Users of information External users and company Management
management
Nature of information Objective Objective and subjective
Guidelines for preparation Prepared according to Prepared according to
GAAP management needs
Timeliness of reporting Prepared at fixed intervals Prepared at fixed intervals
and on an as-needed basis
Focus of reporting Company as a whole Company as a whole or
segment
Unlike financial statements prepared in financial accounting, managerial accounting reports
1
, do not always have to be:
- Prepared according to generally accepted accounting principles (GAAP) this is
because only one company uses the information.
- Prepared for the business as a whole. Most management reports are prepared for
products, projects, sale territories, or other segments of the company.
Organization chart
The operating structure of a company can be shown in an organization chart
Line responsibilities
A line department is directly involved in providing goods or service to customers
Staff responsibilities
A staff department providers services, assistance, and advice to the departments with line
responsibilities
Controller
In most companies the controller is the chief management accountant. The controller’s staff
consist of a variety of other accountants who are responsible for specialized accounting
functions
The management process
1.Planning
2.Directing
2
