Week 1 Management and Cost Accounting

Management versus Financial Accounting Management accounting measures and reports financial and non-financial information tha managers in fulfilling the goals of the organisation.This information is used for decision m those internal to the organisation. •Financial accounting focuses on external reporting that is guided by generally accepted acc principles.This information is used for decision making by those external to the organisati •Don't forget that management accounting and financial accounting are linked; managemen decisions (e.g. choice of depreciation method, inventory costing methods) affect financial a numbers - and vice versa.Financial accounting numbers from past periods (financial state used to generate management accounting reports for future periods (e.g. the budget).Ma and financial reports often draw from the same information database (i.e. the general ledg •ManagementAccountingFinanc Account Purpose ofinformationHelp managers make decisions to fulfillorganisation's goals.Help external use decisions related organisation. Primary usersInternalusers: Managers of theorganisation.Externalusers: in banks, regulators suppliers. Focus andemphasisFuture-oriented: budgetsPast-oriented: his information. Rules ofmeasurementand reporting No prescribed rules("subjective").Normally based on cost-benefit analysis. Based on GAAP ASICand certified external auditor in cases.