Managerial Accounting
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The main difference between managerial accounting and financial accounting is that financial accountants prepare information for external decision makers (stockholders, banks, government agencies) while managerial accountants prepare information for internal decision makers (managers). (Horngren, Sundem, and Stratton, 2005) Financial accounting has more constraints in their freedom of choice in accounting methods, due to regulations by GAAP (Generally Accepted Accounting Principles), than managerial accounting. Some of the responsibilities of financial accountants are:
1. General ledger – A record of all a companys transactions.
2. Accounts receivable and payable-Amounts due and amounts owed.
3. Fixed-asset accounting- Assets such as land, buildings, equipment, etc. that are recorded in an account on the balance sheet.
4. Bank accounting
5. Cash journal accounting-Account used to show money owed by the company.
6. Inventory accounting-Account used to report goods purchased or made by a company.
7. Tax accounting-Account used to report to the federal, state and local governments.
8. Accrual accounting-A method of accounting that takes into account the business impact of events when incurred, regardless of the impact on cash. Fast close
9. Financial statements-Documents that report on a business in cash amounts.
(SAP AG, 2005)
Some of the responsibilities of managerial accountants are:
1. Profit center accounting-A summary of revenues, expenses, and net income (or loss) for a period of time. Cost center and internal order accounting
2. Project accounting-A statement of money allotted for projects within the company and actual money spent.
3. Investment management-The management of various securities to meet specific investment objectives.
4. Product cost accounting-Account of what it takes to produce the final product and what it sells for.
5. Profitability accounting-Account balancing profits of loss of profits.
6. Revenue and cost planning-A means of balancing increases with cost.
7. Transfer pricing-The pricing of goods and services in a company that has multiple divisions.