Question

Define how managerial accounting differs from financial accounting. Be sure to address the diverse users of managerial and of financial accounting and provide examples of how at least five users would utilize accounting information. Cost can be classified in 5 categories-behavior, traceability, controllability, relevance and function. Briefly explain each category. (Watch Accounting 2 - ACCT 122 - Program #223 - Managerial Accounting Concepts and Accounting 2 - ACCT 122 - Program #224 - Managerial Accounting Concepts - Continued Illustrate how managerial accounting information assists managers in performing the roles of planning, directing, and controlling by providing an example of each.

Answer 1

ANSWER:

Managerial accounting is the use of accounting information, to determine the best decision to take, inorder to better the organization, and bring in more profit.

While.

Financial accounting is reporting all financial transaction, by preparing a financial statement, which details out the inflow and outflow of money in the organization.

HOW TO USE ACCOUNTING INFORMATION:

1) Accounting Information are used by managerial accountants to determine the best business to invest more money into.

2) Accounting Information are used by financial accountant to report the profit or loss in the business of the company.

3) Accounting information are used by managerial accountant to decide which investment that should be added or removed from the portfolio, so that much profit will be achieved.

4) Accounting Information are used by financial accountant to calculate and tabulate it financial statement. Using statistical methods and accounting formulas.

5) Accounting Information are used by managerial accountant, to manage the returns in investment, and decide which investment, that will have the highest budget.

Traceability of cost means that all cost should be able to show what lead to it, why the cost is necessary, and the effect of the cost to the business.

Behavior of cost shows the way cost will change whenever they is a change in activities t looko lead to costing. A decrease in spending, will decrease the cost.

Controllability of Cost defines cost to be subject to the decision of how the business will be achieved. This shows that cost can be altered at anytime, to suit the need of the business.

Relevance of Cost defines cost to be used to show how relevant or irrelevant a cost can be to the business, which helps a manger to consider only the relevant cost in the business first.

Function of cost shows the amount invested in relation to the amount produced. It is represented in a cost curve, and is used to optimize the business of the organization.