T1 PPT FINANCIAL ACCOUNTING V MANAGMENT ACCOUNTING Flashcards
Where is management accounting information typically obtained from?
Internally, and it is confidential to business owners.
: Who can access management accounting information?
Only a select group of internal users.
How often are management accounting reports produced?
Regularly, such as daily or weekly.
What results do management accounting reports consider?
Both past results and future possibilities.
Why do reports vary in structure in management accounting?
Because they are customized to the needs of the user and may include estimates.
Who are the main users of financial information in management accounting?
Management and business owners/shareholders.
What do managers need financial information for?
To plan, control daily operations, maximize profitability, and ensure asset security.
Why must management accounting information be frequent and detailed?
To identify problem areas and enable timely decision-making.
What financial statements are typically produced in management accounting?
Profit statements and cash flow statements, usually monthly or more often.
What is the purpose of budgets in management accounting?
To compare actual performance with budgeted performance and highlight problems.
How regulated is management accounting?
It is not highly regulated and provides specific-purpose reports.
What type of information does management accounting include?
Both past results (e.g., departmental performance) and future-oriented data (e.g., capital budgeting).
Is management accounting information subject to external audits?
No, it is not externally audited.
Who are the external users of financial accounting?
Owners, customers, suppliers, lenders, employees, and government agencies.
Why do owners need financial accounting reports?
o evaluate business performance, compare with other investments, and identify trends.
How do suppliers use financial accounting information?
To assess whether a business will continue operating and remain a stable customer.
Why do customers care about financial stability?
They want assurance that the business will exist long-term, especially for ongoing contracts.
What information do lenders (e.g., banks) need?
They assess the firm’s financial viability and ability to repay loans, especially using the balance sheet.
Who are the users of management accounting vs. financial accounting?
Management Accounting: Internal users (managers, employees, owners).
Financial Accounting: External users (investors, lenders, customers, government, public).
How are reports customized in management accounting vs. financial accounting?
Management Accounting: Customizable, includes estimates, detailed analysis, forecasts, and may use different formats.
Financial Accounting: Standardized format (balance sheet, income statement, etc.), based on actual figures
