Professional Documents
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2 Handout PDF
2 Handout PDF
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12/2/2017
General Purpose Financial Statements General Purpose Financial Statements Management Accounting
• Management accounting is a branch of accounting which focuses
• Are the financial statements prepared to accommodate the Primary Users of General Primary Users of Special Purpose
Purpose Financial Financial on the preparation of financial reports used by managers in their
information needs of persons who have no capability to request
Statements Statements day-to-day decision making.
or acquire information directly from the company?
• Investors • Top management (e.g., Board of • Reports generated using management accounting are for internal
• Creditors directors of a company, CEO, users only. As such, management reports need not follow
• If the answer is yes, the financial statements are called general • Shareholders/Stockholders CFO, COO) accounting standards such as the PFRS and PAS.
purpose financial statements. Otherwise, the financial • Government Agencies • Department managers (e.g., sales • Additionally, unlike financial reports that are generated quarterly,
statements are called special purpose financial statements. • Auditors manager, production manager)
semi-annually, or annually, management reports can be done
• Other interested outside parties • Other internal parties
daily, weekly, or whenever managers require a specific report.
Predominantly, external parties use general purpose financial • Management reports typically contain information regarding the
statements to evaluate the performance of the company. amount of cash on hand, the level of sales revenue for a particular
period, costs incurred, or even the comparison of actual results
On the other hand, specific purpose financial statements are with budgeted amounts.
utilized by internal parties to guide them in the decision-making
process for the company.
• Aside from the frequency and the intended users of reports, Role of Management Accountants Analysis. Management accountants should be able to analyze
According to the Chartered Institute of Management Accountants information and use it to make business decisions.
management accounting differs from financial accounting in the
nature of information produced. (CIMA), chartered management accountants perform the following Strategy. Management accountants should be able to formulate
roles: business strategies that will increase the company’s wealth and
Advise managers about the financial implications of projects create value for the company’s shareholders.
• Financial accounting summarizes financial information gathered
Explain the financial consequences of business decisions Risk. Management accountants should be able to identify risks
within a specified period. Thus, financial accounting provides
that can potentially have detrimental effects to the company. At the
information that is historical. Meanwhile, management accounting Formulate business strategy same time, management accountants should give
information is forward-looking. It contains forecasted information Monitor spending and financial control recommendations on how to manage such risks.
used by managers in planning.
Conduct internal business audits Planning. Management accountants should be able to apply
Explain the impact of the competitive landscape accounting techniques in the planning and budget creation phase
Bring a high level of professionalism and integrity to the business of a business.
Communication. Management accountants should be able to
identify what information the management needs and also explain
the numbers to nonfinancial managers.
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Accounting Research
Accounting research, as the name suggests, is a branch of
accounting that deals with the creation of new knowledge. Combining
the models produced by the hard sciences in research and testing with
financial statements, stock prices, surveys, and experiments, we can
gain a specific perspective and basis on the following:
Deciding and implementing new accounting and auditing standards
Presenting unusual economic transactions in the financial
statements
Learning how new tax laws impact clients and employers
Discerning how the accounting profession affects the capital
markets through academic accounting research
Researchers in the accounting field also apply the scientific method
like their counterparts in the sciences. With the constantly evolving field
of accountancy, it is expected that accounting research will continue to
play a vital role in the future.