Professional Documents
Culture Documents
Chapter 1
Chapter 1
Figure 1
Users of Accounting Information (Stakeholders)
External Users
Internal Users
)
(They cannot access the Accounting Records)
Financial Accounting
Auditing
Managerial Accounting
Planning
Implementing
the Plan &
Decision
Making
Controlling
&
Performance
Evaluation
Feedback
Financial Statements
1. Balance Sheet measures the Financial Health of the Company.
2. Income Statement measures the Financial Success of the Company.
3. Cash Flow Statement measures the Liquidity of the Company.
1. How does a company decide on the amount of information to disclose?
2. In what format should its financial information be presented?
3. How should each item be measured?
Companies must prepare the Financial Statements according to generally accepted set of
rules, standards, principles, and concepts referred to as:
Figure 2
Managerial Accounting
Planning
Establishing goals and objectives,
predicting results, and drawing a
detailed plan of who will do what,
when and how to achieve the
desired goals.
Controlling &
Performance Evaluation
Budgeting
(Ch. 6)
Variance Analysis
(Chs. 7, and 8)
Measuring Costs of
Operations
(Product Costing Systems)
(Ch. 4)
Activity-Based
Costing System
(ABC)
Process Costing
System
(Ch. 5)
Decision Making
CVP Analysis (Ch. 3)
Decision Making (Ch.
11)
Perspective
Financial Accounting
Managerial Accounting
Primary Users
Past
Purpose of reports
Frequency of Reporting
As frequent as needed
Level of Aggregation
Aggregate
Very detailed
Rules& Regulations of Regulated. Must follow GAAP No GAAP. Uses Cost Benefit
Reporting
concept.
Guideline for judging
Usefulness of Info.
Focus is on Reliability
Focus is on Relevance
Verification process
Independent Audit
Internal Audit