Chapter 15
Financial accounting provides info to external stakeholders about the financial
performance and the economical health of a company.
Management accounting provides info to management for business decision making.
Unlike financial statements prepared in
financial accounting, managerial
accounting reports 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.
Multiple-step income statement: Classified balance sheet:
, Costs of goods manufactured (balance sheet) to costs of goods sold (income
statement)
Step 1: the cost of materials used.
beginning materials (65.000) + material purchased (100.000)
= materials available for use (165.000)
materials available (165.000) - materials not used (35.000)
= materials used (130.000)
Step 2: the manufacturing cost in the period.
material used in production (130.000) + direct labor (110.000) + factory overhead (44.000)
= total manufacturing costs (284.000)
Step 3: the total cost of a manufacturing.
start work in process (30.000) + manufacturing costs (284.000)
= total manufacturing cost (314.000)
Step 4: the total cost of goods manufactured:
total manufacturing (314.000) - end work in process (24.000)
= cost goods manufactured (290.000)
Step 5: the cost of goods sold.
start finished goods (60.000) + cost goods manufactured (290.000)
= cost goods for sale (350.000)
cost goods for sale (350.000) – finished goods not used (62.500)
= costs of goods sold (287.500)
Financial accounting provides info to external stakeholders about the financial
performance and the economical health of a company.
Management accounting provides info to management for business decision making.
Unlike financial statements prepared in
financial accounting, managerial
accounting reports 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.
Multiple-step income statement: Classified balance sheet:
, Costs of goods manufactured (balance sheet) to costs of goods sold (income
statement)
Step 1: the cost of materials used.
beginning materials (65.000) + material purchased (100.000)
= materials available for use (165.000)
materials available (165.000) - materials not used (35.000)
= materials used (130.000)
Step 2: the manufacturing cost in the period.
material used in production (130.000) + direct labor (110.000) + factory overhead (44.000)
= total manufacturing costs (284.000)
Step 3: the total cost of a manufacturing.
start work in process (30.000) + manufacturing costs (284.000)
= total manufacturing cost (314.000)
Step 4: the total cost of goods manufactured:
total manufacturing (314.000) - end work in process (24.000)
= cost goods manufactured (290.000)
Step 5: the cost of goods sold.
start finished goods (60.000) + cost goods manufactured (290.000)
= cost goods for sale (350.000)
cost goods for sale (350.000) – finished goods not used (62.500)
= costs of goods sold (287.500)
