This research aims to evaluate and present financial and management accounting: the contribution to effective business and management. This paper is an attempt to analyze the role of management and financial accounting and the benefits, limitations of the approaches with the help of some current practices. …
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From the research it can be comprehended that for efficiently running a business the management of a company should make it sure that the money available to them is utilized at the best manner. The main objective of the company management is optimally using the resources available to them. Here comes a conflict between the management and the shareholders of the company about the objective of the business. But it has been widely maintained that the long term objective of the business should be shareholders’ wealth maximization and the short term objective should be profit maximization of the company. For achieving the goal the accountants make it sure that the accounts are recorded properly and they have to prepare financial statements periodically based on these. The stakeholders of the company i.e. the shareholders, the customers, banks, government, the management of the company are interested in the financial statements. Their future decisions about the company depend on the financial statements which describes the financial condition of the company at a certain date. The shareholder of the company takes decisions about whether or not to invest in the company further; the customers get interested if the company is performing well. The role of the management accountants also depend on those financial statements. They have to plan for the future based on the statements. This paper is an attempt to analyze the role of management and financial accounting and the benefits, limitations of the approaches with the help of some current practices. Financial Accounting This field of accountancy is concerned with the preparation of the financial statements which are used by the stakeholders of the company for different purposes. The financial accountants summarize the day to day accounting records and prepare the financial statements for a period. It should be making sure by the accountants that the information disclosed by them are precised, transparent so that it reflects the actual financial condition of the company. The management has to make sure that they are abiding the rules of the financial boards such as Financial Accounting Standards Board (FASB) and the statements are prepared according to the principles like Generally Accepted Accounting Principles (GAAP). The report made by the company management should be relevant for the users of those statements. The companies should make it sure that the published statements are properly audited by the external and internal auditor. The auditors’ job is to check that the reported statements are transparent and according to the financial reporting standards. The stakeholders of the company can take the decision based on the audited statement as the reliability is more than the unaudited statement. Financial accounting also makes strong the corporate governance of a company. In the late 90s the compensation of the U.S. executives has been reduced generally due to the direct role of accounting. The board can decide about the compensation and bonus of the employees on the basis of the financial statements (Bushman and Smith, 2001, p.242). Efficient corporate governance in a company assures the successful continuity of a business. For reporting the financial statements the accountants should identify the stakeholders’ area of interest. A research done in China suggests that domestic investors of China are interested more on gaining in short term basis than the financial data; where the international investors are more interested on the book values for evaluating the stocks than the earnings information available to them (Wu, Koo and Kao, 2005, pp.15-18). This example suggests that the financial accountants of the company should emphasized more on the data in which the investors are
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(“Financial and Management Accounting: The Contribution to Effective Essay - 1”, n.d.)
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(Financial and Management Accounting: The Contribution to Effective Essay - 1)
“Financial and Management Accounting: The Contribution to Effective Essay - 1”, n.d. https://studentshare.org/finance-accounting/1394850-financial-and-management-accounting-the.
This research is governed by the following research questions, which will aid in attaining objectives and aim of the research: Is there a difference between management accounting and financial accounting and does it benefit a business to incorporate both strategies in business? To understand this concept, it is of relevance to distinguish management accounting from financial accounting.
The essay discusses that both financial and management accounting is a critical part of any organisation. They play a vital role to make or break a business. Effectiveness and Efficiency of business organisations depends on sound financial and management accounting systems involved in any business concern.
Accountability 12 Conclusion 13 Reference 15 Abstract This study represents one of the most important areas of management accounting i.e. desirability and effectiveness of accounting for management control. Accounting is the most effective device used by managers and management for organizational control.
The expert accounting conception and scientific accounting dexterity regarding measurement of performance, analysis, auditing and final reporting are as well pertinent to the supervision of healthy and sustainable ecological performance. With the increased international community's recognition of the ecological concerns, so has there been a simultaneously increased demand on accountants to provide comprehensive ecological costs and information on performance.
Management accounting is the process of identifying, recording, classifying, analysing and reporting of all cost aspects of information for management decisions, planning and control, performance evaluation, and even strategic purpose (Berry & Jarvis, 1997; Dyson, 2003; Glynn & Murphy, 1998; Wood & Sangster, 2002).
This aspect of accounting concerns itself with learning about the effect an organisation has on society and about its relationships with an entire range of stakeholders to whom it is accountable. These would include all those groups who affect and/or are affected by the organisation and its activities.
The current dilemma in the business world is that financial accounting becoming more harmonized whereas the management accounting varies with firms and regions. This assignment doesn't aim to show that how this harmonized financial accounting occurs or what are the differences between the two.
The absorption costing method concentrates on both the fixed as well as the variable costs. Hence this method is not very beneficial in the decision making and budgeting processes (Garrison, Noreen and