Provide information regarding users of managerial accounting and financial accounting and discuss how each user can utilize this information.
Financial accounting is the creation of cash flow and balance sheet and income statements by CPA's to be used by both internal and external stakeholders in analyzing a company's financial health, determining its credit-worthiness and forecasting future earnings and stock prices. Managerial accounting is the examination and reporting of internal company processes by CMA's to be shared only with corporate management for the purposes of strategic planning and improved operational efficiency.
To understand the different users and usages of financial accounting versus managerial accounting, it is first imperative to understand the differences between both types.
Financial accounting is concerned with the collection of financial data to create statements reporting profits and losses on a company-wide level and to appropriately value the company's assets. These statements are issued at the end of specified periods and are intended for distribution to both internal and external company stakeholders. The goal is to examine past actions, and it requires precise data and careful analysis in order to be useful.
Managerial accounting, on the other hand, is concerned with the...
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