Response 1: Part 1 Memo: Understanding Similarities and Differences between Financial and Managerial Accounting Attention : Susan Thompson Susan- In an effort to get you up to speed on our expectations, I wanted to provide some details on the differences you can expect to see between managerial and financial accounting and provide you some examples from both areas. Financial accounting is the backbone of the day-to-day functions of accounting. From payables, to receivables to collections, this area ensures all of the outstanding bills and debts are paid so the organization can operate. The details received from the day to day management of financial accounting are provided to stakeholders’, creditors, vendors and management to ensure the organization is being forthcoming and so management can use the data to further the position of the company(MUSE: Financial and Managerial Accounting). Reports provided within financial accounting include the following: Income Statement Statement of Owners Equity Balance Sheet Cash Flow Statement Each of these documents is used by managerial accounting team members to help make decisions about the future of the organization. Managerial accounting is optional. This is a team of managers who are trying to plan for future business and need to understand the ebbs and flows of the business itself and how any of the business segments or areas can function more productivity. One thing to note is that Financial Accounting is handled by external persons who try to ensure the strength of financial decisions whereas Managerial Accounting is managed by internal managers responsible for the success of the organizations. Financial Accounting Reporting for the IRS is mandatory and GAAP accounting rules must be adhered too. Managerial Accounting has no set rules nor are they bound to any oversight group and are not required to provide any sort of mandatory reporting. Additional reports used to analyze the health of an organization are horizontal and vertical analyzes. Horizontal analysis is where we take a series of reports year over year and try to determine what trends were in assets, equity, cash flow, etc. Using these reports allows the management team to better understand the business and what could be coming in the future. Vertical analysis is where we analyze financial statements based on entries for assets, accounts, liabilities and equities. We review each of these as a proportion of the total account and try to understand what led to any inconsistencies. If you need any further clarification regarding these concepts, reporting or analysis, please reach out to me directly. Thank You Part 2 Attn: Board of Directors MEMO  In an effort to help our team better understand how we can use our current and previous accounting information to help plan and control for future business, I have broken down details on four key financial reports we receive regularly. These reports include the income sta ...

1. Response 1:
Part 1
Memo:
Understanding Similarities and Differences between Financial
and Managerial Accounting
Attention
: Susan Thompson
Susan-
In an effort to get you up to speed on our expectations, I
wanted to provide some details on the differences you can
expect to see between managerial and financial accounting and
provide you some examples from both areas.
Financial accounting is the backbone of the day-to-day
functions of accounting. From payables, to receivables to
collections, this area ensures all of the outstanding bills and
debts are paid so the organization can operate. The details
received from the day to day management of financial
accounting are provided to stakeholders’, creditors, vendors and
management to ensure the organization is being forthcoming
and so management can use the data to further the position of
the company(MUSE: Financial and Managerial Accounting).
Reports provided within financial accounting include the
following:
Income Statement

2. Statement of Owners Equity
Balance Sheet
Cash Flow Statement
Each of these documents is used by managerial accounting team
members to help make decisions about the future of the
organization.
Managerial accounting is optional. This is a team of managers
who are trying to plan for future business and need to
understand the ebbs and flows of the business itself and how
any of the business segments or areas can function more
productivity. One thing to note is that Financial Accounting is
handled by external persons who try to ensure the strength of
financial decisions whereas Managerial Accounting is managed
by internal managers responsible for the success of the
organizations. Financial Accounting Reporting for the IRS is
mandatory and GAAP accounting rules must be adhered too.
Managerial Accounting has no set rules nor are they bound to
any oversight group and are not required to provide any sort of
mandatory reporting.
Additional reports used to analyze the health of an organization
are horizontal and vertical analyzes.
Horizontal analysis is where we take a series of reports year
over year and try to determine what trends were in assets,
equity, cash flow, etc. Using these reports allows the
management team to better understand the business and what
could be coming in the future. Vertical analysis is where we
analyze financial statements based on entries for assets,
accounts, liabilities and equities. We review each of these as a
proportion of the total account and try to understand what led to
any inconsistencies.

3. If you need any further clarification regarding these concepts,
reporting or analysis, please reach out to me directly.
Thank You
Part 2
Attn: Board of Directors
MEMO
In an effort to help our team better understand how we can use
our current and previous accounting information to help plan
and control for future business, I have broken down details on
four key financial reports we receive regularly. These reports
include the income statement, statement of owners’ equity,
balance sheet and cash flow statement. Each of these statements
is unique and can help our organization plan for the future. If
there are any questions, you may have regarding how to read or
understand these reports, I am happy to meet you one on one. I
hope you can see the value of these reports and how key this
information is to our team (MUSE, Principles of Financial
Statements).
Income Statement- The income statement will include
information that measures a company’s performance over a
period. This statement key data including expenses relating to
operating, sales, expenses, profit and depreciation. This
document is helpful to managerial accountants because it
provides historical data on the historical performance on the
company.

4. Statement of Owners Equity- This includes the owner’s total
equity for a year taking into an account any investments and
draws the owner has made that year.
Balance Sheet- This includes assets (current and fixed) as wells
as liabilities (current and long term). Owners’ equity is also
included. This provides us a better understanding of what profit
or loss we are operating under.
Cash Flow Statement- This statement includes the monies that
are coming in and going out. This report can include will also
consider investments and financing activities and provide a total
of cash available at the close of the year.
Thank You
Response 2:
TO: Sharon Thompson
FROM: Supply Chain Planning Manager
Subject: Differences between Financial and Managerial
Accounting
Date: 5/18/2018

5. Hi Sharon and welcome to the Planning & Purchasing
Department here at EEC. It is my understanding that you have
experience in financial accounting, I think that is great, and it
will be an asset to our department. However, I just wanted to
take a few moments to ensure you understand the differences
between financial accounting and managerial accounting and
how managerial accounting will help me make the best
decisions for the department I can.
Financial accounting
for all intents and purpose is to create and distribute the
reporting of financial information to external parties such as
stockholders, creditors, and regulators. (Garrison, Noreen, &
Brewer, 2014). Financial accounting brings attention to the
effects of what previous business activities have had on the
current economic state of the company; as well as provides
financial reporting to the entire company. Financial accounting
is used in summarizing the historical transactions of the
company which is used to develop then the four financial
statements used by the company, our shareholders and
government agencies (Colorado Technical University, 2018).
Those reports are:
Balance sheet
Income statement
Statement of cash flows
Statement of stockholders’ equity
Financial accounting is rule-bound and must always follow the
Generally Accepted Accounting Principles (GAAP) and
International Financial Reporting Standards (IRFS) regulations.

6. Financial accounting is mandatory for all external reports.
Financial Accounting emphasizeseconomic consequences
company performance, past transactions.
Managerial accounting
, on the other hand, is used to supply the financial and
economic information that is most helpful to managers and
other internal company users (Colorado Technical University,
2018). Managerial accounting is used to help me make best the
day-to-day decision of the department and segments of the
business I am responsible. For example; I use managerial
accounting when I need to know if now is a good time hire new
employees, or if what we are purchasing can be purchased
elsewhere for better pricing. It will help me to work with the
manufacturing teams to determine if buildingspecific items here
are better than outsourcing them. Other internal users would
include, our CEO, as well as other employees in the company
like yourself.
Managerial accounting also focuses on the future of the
company business not so much what has happened in the past.
Managerial accounting helps managers in the areas of planning,
controlling and decision making by helping to establish goals
and how to make them a reality. Receiving feedback from others
to see that the plans that were developed are moving forward
correctly and that the appropriate changes are made when
needed, and ensuring that the correct decisions are made for the
business, which at times could mean having more than one
outcome but choosing the one that is the best. (Garrison,
Noreen, & Brewer, 2014). There are also reports that can help
with these areas such as:
· Creating a Budget – which is a detailed plan showing the
future that is expressed in quantitative terms.
· Performance reports – compares budgeted to actual data to

7. identify and learn from high performance and to find areas that
need to be improved.
Managerial accounting concentrates on decisions that could
affect the future of the company, as well as can be broken down
into segments for more natural capturing of information and
decision making. (Garrison, Noreen, & Brewer, 2014).
Managerial accounting is also not as ridged as financial
accounting, as it is not GAAP/IFRS bound. Managerial
accounting emphasizes decisions affecting, the businesses
future, segment performance, timeliness, and relevance.
Though both forms of accounting have their place in the
company, I hope the information I have shared with you today
with help you to understand how managerial accounting helps
me to do things that are needed daily to contribute to our
company.
TO: EEC Board Members
FROM: Gladys M Artis, Supply Chain Planning Manager
Subject: Differences between Financial and Managerial
Accounting
Date: 5/18/2018
CC: Dr. Cynthia Waddell, SVP Supply Chain
Board Members
I would like to take a little time to explain to you the purpose of
four critical financial statements that are used to interpret
EEC’s economic status during specific times. Each is useful, but
they each also have their disadvantages.

8. The Balance sheet
is a financial statement that is used to give readers a look at a
snapshot of the company’s financial standing at a certain point
in time. The balance sheet is used to show the assets of the
company (owns), and the company’s liabilities (owe), along
with the company’s equity(worth) (Colorado Technical
University, 2018). The equation for determining the assets of a
company using the balance sheet is
Assets = Liabilities + Shareholders' Equity.
The income
statement
is a financial statement that shows over a specific period what
were the sources of revenues generated and what the expenses
were for those revenues. (Colorado Technical University,
2018). Its primary purpose is to determine the net income for
the accounting period that is being reported. This statement is
also known as the profit and loss statement or statement of
revenue and expense. This statement provides an overview of
the company’s sales and net income (Investopedia.com, 2018).
Statement of cash flows
is a financial statement that shows the cash receipts (inflow)
and cash payments (outflow) for a period in the company. These
cashflows are classified by operating, investing, and financial
activities. (Colorado Technical University, 2018). Having a
positive cash flow details that the company’ liquid assets are
growing which means there is more money to be able to do
business.
Statement of stockholders’ equity-
is a portion of the balance sheet that shows the changes in the
value of the shareholder/stockholders equity from the beginning
of a given accounting period to the end of that time, typically a

9. year. The formula for calculating the stockholder equity is as
follows.
Total Assets-Total Liability= Stockholder Equity
. This statement allows the shareholders to see how well their
investment is doing.(Motley Fool Staff, 2015)