Phase 1 Accounting in the Organization DB2
Colorado Technical University
Professor Lynn Sheik
Accounting can be broken down into many different categories and areas. Managerial and financial accounting is only two parts of the cost accounting system. Within these two different aspects of accounting there are many similarities and differences not only between these categories but also in their rules and regulations, management information and reporting requirements as well. The certifications of accountants are also differentiated in these two categories, CMA and CPA. No matter what category you place an accountant in; the job is crucial in the business world.
Managerial accounting is part of a company's management-information system, which provides accounting and other quantitative data to managers at all levels inside the organization. It is the process of supplying the managers and employees in an organization with relevant information, both financial and nonfinancial, for making decisions, allocating resources, and monitoring, evaluating, and rewarding performance. (Atkinson, Kaplan, Matsumura, & Young, 2012) The preparation of information is used for decision making, planning, directing and controlling a company's operations.
Financial accounting is retrospective, reporting and summarizing in financial terms the results of past decisions and transactions. It is primarily oriented to external stakeholders, such as investors, creditors, and tax authorities. It must be consistent with rules formulated by standard setters such as the Financial Accounting Standards (FASB) in the United States and the International Accounting Standards Board (IASB) for much of the rest of the world, and local country regulatory authorities, such as the U.S Securities and Exchange Commission (SEC). These standards setters and regulatory authorities specify the content of the reports, the rules for how the content gets developed, and...