LEVEL 5

ACCOUNTING FOR MANAGERS

ASSIGNMENT
 EXPLAIN THE AIMS AND PURPOSE OF FINANCIAL AND
MANAGEMENT ACCOUNTING TO BUSINESS.

In general, a business has two types of accounting: managerial

accounting and financial accounting. Internal accounting is
referred to as managerial accounting. It helps companies with
budgeting, cost center assignment, and other tasks.

Two of the four primary divisions of accounting are financial

accounting and managerial accounting (e.g. assess
bookkeeping reviewing are others). Financial and
administrative bookkeeping are very distinct, despite some
parallels in method and application.
 Continued…..

The primary goal of administrative bookkeeping is

to generate useful data for an organization's internal
use. Business managers collect data in order to
better strategic planning, assist them in setting
ambitious goals, and ensure that firm resources are
used efficiently.
 Continued…..

The primary goal of administrative bookkeeping

is to generate useful data for an organization's
internal use. Business managers collect data in
order to better strategic planning, assist them in
setting ambitious goals, and ensure that firm
resources are used efficiently.
 Continued….

Managerial accounting's main goal is to increase profits

while avoiding losses. It focuses on data visualization to
help managers predict financial imbalances and make
important decisions. It has a wide scope and applies to a
variety of organizational operations.

Managerial accounting is the process of reorganizing

financial account data in order to make choices. As a result,
without referring to a specific financial accounting system,
management cannot enforce managerial judgments.
 Continued….

Internally, financial accounting has various uses,

but it is primarily utilized to tell people outside of
the organization. Financial accounting's final
reports or financial statements are supposed to
demonstrate a company's economic success and
financial health. Financial accounting serves the
interests of a company's shareholders, creditors, and
industry regulators, whereas managerial accounting
serves the interests of the company's management.
 Continued….

A company's financial statements are utilized for a number

of purposes. They give vital information to shareholders
and loan debtors that may help investors become more
engaged in their investments. Management uses financial
statements on a regular basis to maintain track of the
company's present activities and future intentions.
Financial statements may be used by all sorts of investors
to build an analysis based on trends, ratios, and industry
comparisons. Bookkeeping that has been packaged for use
outside of the office is referred to as "financial
accounting."
 Who are the various users of accounting information
and what information would these users require?

Internal Users
These are the people that run the business and utilize accounting data to
plan, control, and evaluate operations.

 The Leaders - As the initial consumers of accounting data, managers

have a substantial influence on the smooth running of the business,
that is, its performance, and in particular on decision-making.
 
 Employees’ representatives - Employee representatives (work
councils, union reps, and so on) have access to financial data in order
to undertake their own analysis of the company's financial situation
and so check the relevance of management decisions.
Continued
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External Users
Despite the fact that they work for those other firms, they
want financial and performance data for the corporation.
This group consists of the following individuals:

 Investors: Investors rely on accounting data while

purchasing, holding, or selling stocks.

 Creditors: Calculate the risks of granting a company

credit or loan using accounting data.
Continued….
 Describe the nature and role of the Generally Accepted Accounting
Principles (GAAP), International Accounting Standards Board
(IASB) and the Standards Advisory Council (SAC)

The Financial Accounting Standard Board (FASB)

has created a collection of accounting principles,
standards, and procedures known as Generally
Accepted Accounting Principles (GAAP) (FASB).
Its goal is to increase the clarity, uniformity, and
comparability of financial data transmission.
 Continued…
The International Accounting Standards Board
(IASB) is overseen by the IFRS Foundation, a non-
profit organization. IASB is based in London. Its
goal is to provide internationally accepted
accounting standards such as the International
Financial Reporting Standards (IFRS). Its job is to
create and publish the accounting standards that
must be followed while presenting financial
statements.
 Continued…
The forerunner of the IFRS Advisory Council was
the Standard Advisory Council (SAC). It existed
from 2001 to 2010, and during that time it was a
major organ in the creation of the International
Financial Reporting Standards (IFRS) and hence
international accounting
THE END