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Managerial Accounting Ch1 Note-2

In: Business and Management

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Managerial Accounting:
Chapter 1: Managerial Accounting: An Overview
- This chapter explains why managerial accounting is important to the future careers of all business students. It answers three questions:
(1) What is managerial accounting?
(2) Why does managerial accounting matter to your career?
(3) What skills do managers need to succeed? It also discusses the importance of ethics in business and corporate social responsibility.
□ What is Managerial Accounting? | Financial Accounting | Managerial Accounting | 1. Users | External persons whomake financial decisions | Managers who plan for and control an organization | 2. Time focus | Historical perspective | Future emphasis | 3. Verifiability versus relevance | Emphasis on objectivity and verifiability | Emphasis on Relevance | 4. Precision versus timelines | Emphasis on precision | Emphasis on timeliness | 5. Subject | Primary focus is on companywide reports | Focus on Segment reports | 6. Rules | Must follow GAAP / IFRS | Not bound by GAAP / IFRS | 7. Requirement | Mandatory for external reports | Not Mandatory |

There are seven key differences between financial accounting and managerial accounting: 1. Users: Financial accounting reports are prepared for external parties, whereas managerial accounting reports are prepared for internal users. 2. Emphasis on the future: Financial accounting summarizes past transactions. Managerial accounting has a strong future orientation. 3. Relevance of data: Financial accounting data should be objective and verifiable. Managerial accountants focus on providing relevant data even if these data are not completely objective and verifiable. 4. Less emphasis on precision: Financial accounting focuses on precision when reporting to external parties. Managerial accounting aids decision makers by providing good estimates as soon as…...

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