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CAPE UNIT 2                   FINANCIAL ACCOUNTING vs. COST & MANAGEMENT ACCOUNTING                                    MooreNotes
     MN 201
                         Accounting is the process of identifying, measuring and communicating financial and non-financial
                              information to permit informed judgments and decisions by users of the information.
                          External Users                                                           Internal Users

                 Financial accounting                                             Cost and Management accounting
The process of recording, estimating, organizing,      Focuses on the techniques/methods for             (management) the process of
analyzing, and summarizing (historical) monetary       determining the cost of a project, process, or    identification, measurement,
transactions for use in the preparation of financial   item through direct measurement, arbitrary        accumulation, analysis, preparation,
statements based on the consequences of past           assignment, or systematic and rational            interpretation and communication of
events. The statements include balance sheet,          allocation.                                       information used to plan, evaluate and
income, owner s and shareholders equity, and cash                                                        control the use of and accountability
flow statements.                                                                                         for its resources in the future.
                                    FOCUS                                                                       FOCUS
        · Caters to external interests                                               o caters to internal interests
        · Emphasis on summary of past event                                          o emphasis on decisions affecting the future
        · Objectivity and verifiability                                              o flexibility and relevance
        · Precision of information                                                   o timeliness of information
        · Summarizes as a whole                                                      o details by part/segment
        · Follows GAAP principles (IAS, IFRS)                                        o no specific rules to follow
        · mandatory                                                                  o not mandatory
                                  NECESSARY                                                                   NECESSARY
        Specifically for decisions about                                            Specifically for decisions about
            · returns on capital invested                                                         · which products to sell
            · going concerns                                                                      · pricing jobs, products, or services
            · future investments                                                                  · financing the cost of production
            · safeguarding of assets                                                              · acquiring production capacity

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Fin vs ma

  • 1. CAPE UNIT 2 FINANCIAL ACCOUNTING vs. COST & MANAGEMENT ACCOUNTING MooreNotes MN 201 Accounting is the process of identifying, measuring and communicating financial and non-financial information to permit informed judgments and decisions by users of the information. External Users Internal Users Financial accounting Cost and Management accounting The process of recording, estimating, organizing, Focuses on the techniques/methods for (management) the process of analyzing, and summarizing (historical) monetary determining the cost of a project, process, or identification, measurement, transactions for use in the preparation of financial item through direct measurement, arbitrary accumulation, analysis, preparation, statements based on the consequences of past assignment, or systematic and rational interpretation and communication of events. The statements include balance sheet, allocation. information used to plan, evaluate and income, owner s and shareholders equity, and cash control the use of and accountability flow statements. for its resources in the future. FOCUS FOCUS · Caters to external interests o caters to internal interests · Emphasis on summary of past event o emphasis on decisions affecting the future · Objectivity and verifiability o flexibility and relevance · Precision of information o timeliness of information · Summarizes as a whole o details by part/segment · Follows GAAP principles (IAS, IFRS) o no specific rules to follow · mandatory o not mandatory NECESSARY NECESSARY Specifically for decisions about Specifically for decisions about · returns on capital invested · which products to sell · going concerns · pricing jobs, products, or services · future investments · financing the cost of production · safeguarding of assets · acquiring production capacity