MANAGERIAL ACCOUNTING

The natures of costs related to Managerial Accounting

The natures of costs related to Managerial Accounting

Introduction

The general accounting function coordinates the organization's entries into its financial journals in conformity with a system of internal accounting control; executes regular “closings” of these records to post them to general and subsidiary ledgers; reconciles discrepancies and imbalances; notes variances; prepares consolidations of financial results in multisegment entities; prepares financial statements and other reports; maintains related databases, including schedules of fixed assets; and performs physical inventories, financial account analyses, and other procedures to assist the external auditors in their testing and review procedures.

Discussion

Research into knowledge management has explored various themes, including the nature and form of organizational knowledge in PSFs; the relationship between organizational knowledge and the strategy, economic, and organizational structures of PSFs; the practicalities of developing and utilizing formal knowledge management systems within PSFs; and the socialization processes through which individual professionals learn how to share knowledge with their colleagues, as well as the reasons why they resist such initiatives. Knowledge management represents a complex management challenge in PSFs because a professional's technical and client-related knowledge represents his or her primary source of value to the firm. Codifying and sharing this knowledge disseminates its value throughout the firm and potentially diminishes the power it confers upon the individual.

Under the cash basis of accounting, no effort is made to use the matching accounting principle, which seeks to match revenue in the same accounting period in which the related expense occurs. This matching is typical of the accrual basis of accounting. The accrual basis of accounting recognizes revenue when goods are sold or a service is performed and not when the money is received. Costs are incurred and expenses are recognized in the period in which the revenues they helped produce are recognized. As a result, the accrual basis of accounting more accurately depicts how the entity is performing.

Under the cash basis of accounting, revenue recognition is delayed until cash is collected. Expense is recognized when cash is disbursed. As a result, income or loss for any period is simply the difference between cash disbursed and cash received. Therefore, net income for an entity using the cash basis of accounting can be very deceiving. For example, if an entity receives a large sum of money in the current year to finance a construction project to be completed in the following year, revenue ...