Accounting 2301 Chapter 11 - Managerial Accounting vs. Financial Accounting

Introduction

• Shift focus from financial accounting to managerial accounting.
• Discuss differences between managerial and financial accounting.

Key Differences

Financial Accounting

• Purpose: Focus on external financial reports for external users like creditors and investors.
• Report Frequency: Reports are mandatory quarterly and annually to SEC.
• Verification: Reports are audited by CPAs for submission to external users.

Managerial Accounting

• Purpose: Focus on internal users within the company.
• Flexibility: No generally accepted methods; reports are tailored to decision-making needs.
• Report Frequency: Internal reports can be as frequent as needed (weekly, monthly, daily).
• Content: No limitations on what can be included; data-driven for specific management needs.
• Verification: No external audit required; relies on internal use accuracy.

Managerial Functions

Primary Functions

1. Planning
   • Developing business plans.
2. Directing
   • Implementing plans by organizing resources.
3. Controlling
   • Monitoring and adjusting plans to meet goals.

Organizational Structure

• Hierarchical overview: Stockholders → Board of Directors → CEO → Management levels.
• Importance of tailored information for decision-making at different management levels.

Next Steps

• Upcoming discussion on introductory concepts for managerial accounting.
• Proceeding to more advanced topics in subsequent videos.