What is the difference between managerial and financial accounting?Managerial accounting is concerned with providing information to manager to use within the organization.
What is the difference between managerial and financial accounting?
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Managerial accounting is concerned with providing information to manager to use within the organization. This provides information for managers to plan, control and make decisions. Managerial accounting emphasizes decisions that affect the future. Managers review accounting reports that provide revenue, expenses, labor, space, equipment and RVU’s. Managerial accounting does not need to follow GAAP/IFRS and is not mandatory.
Financial accounting is the reporting of financial information to external parties such as stockholders, creditors and regulators. It emphasizes financial consequences of past activities. It is objective and verifiability and precise. Financial accounting must follow GAAP/IFRS and is mandatory for external reports.
How is accounting relevant to career?
Both managerial and financial accounting is critical to managers who are in charge of running a healthcare organization. The leadership must know the revenue, minus the expenses, charity/bad debt in order to ensure bills are being paid. Managerial accounting can provide details to the expenses, labor costs and overhead costs. Managers must understand accounting. It would be like a person not reviewing their bank statements. A person wants to make sure their payday money is in the bank, the person monitors the money they are paying out and if any interest is incurred.
Why has ethical behavior in the area of accounting and finance so important?
Ethical behavior and integrity is doing the right thing when nobody is looking. Trust is required between consumer and organizations. Consumers don’t want to be taken advantage from a financial perspective. It is very important that organizations trust the accountants who are reviewing and collating financial information. The reporting and integrity of the data is used to make company decisions. In addition if a company has dishonest staff who are not following GAAP/IFRS guidelines they could be fined for unethical reporting of financial information.
The key difference between managerial and financial accounting is that managerial accounting information is aimed at helping managers within an organization make decisions. Financial accounting is aimed at providing information to parties outside of an organization. Managerial accounting is relevant to future business and careers because it applies to any industry. I n my future manager position, I know I will be concern with how to price products or services, or whether to allocate resources to training staff. It is beneficial to also know the most efficient way to raise capital or how to adjust strategic decisions in light of the economic environment. Making capital budgeting and decisions is a vital part of being a manager. Also, strategies decision making is an ongoing process that involves creating strategies to achieve goals.
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