Runner Head: IMPORTANCE OF ACCOUNTING

Importance of Financial and Managerial Accounting

Importance of Financial and Managerial Accounting

Introduction

Management has been described as the process by which resources are united in an integrated system to achieve the goals of the system. In most organizations, management, at its various levels, plans and sets goals and objectives and strives to ensure that they met. Managerial accounting is considered as a basis for business operations. This table, which shows not only the numbers for financial accounting, but it, also shows everything: from planning to toilet paper inventory. Financial accounting provides irrefutable facts delivered by numbers, and as was said, over time, the numbers never lie. Numbers provided in the financial indicators that will determine the outlook for next year. These figures are important because they are things that will help managers and other managers to make informed business decisions for the company(Kaplan,1987).

Managerial and Financial Accounting

Accounting can be divided into many different categories and regions. Managerial and financial accountings are only two of the cost accounting system. That in these two different aspects of accounting there are many similarities and differences not only between these categories, but also in their rules and regulations, information management and reporting requirements as well. Certification of accountants also differentiated these two categories, CMA and CPA. Regardless of what category you're an accountant, work is crucial in the business world (Sapp, 1990).

Managerial vs. Financial

Managerial accounting is part of the management-information systems company that provides accounting and other quantitative data for decision makers at all levels within the organization. Preparation of information used for decision-making, planning, management and control of the company's operations. Financial reporting is the use of accounting information for reporting to parties outside the company. Preparation of information used for published financial statements and other financial statements. The focus of management accounting is to the needs of managers within the company, rather than interested parties outside the company. Some of the users of financial accounting information of current and prospective shareholders are lenders and investment analysts. The main similarity between the two is that they both rely on data from the primary organization for the accounting system, mainly cost accounting system(Kaplan,1987).

Rules and regulations

Managerial accounting is not required by the rules and is not regulated because it is only intended for management within the company. The financial statements requires management and should be consistent with widely accepted set of rules, standards and procedures known as generally accepted accounting principles (GAAP). They are regulated by Financial Accounting Standards Board (FASB), as well as the Securities and Exchange Commission (SEC). Regulation of Accountants is also dependent on their own professional standards as well as their professional ethics (Friedl, 2005).

Management and Reporting

Both managerial and financial accountants are responsible for the management of competence, confidentiality, integrity and objectivity. Managerial accounting reports are often focused on the subunits in an organization such as departments, divisions, geographical regions or groups of goods. These reports are based on combined historical data, estimates and projections about future events, and can be ...