Financial Accounting and Managerial Accounting Systems

Financial Accounting and Managerial Accounting Systems Executive Summary Though, financial accounting and managerial accounting systems prepare and analyze the same financial data, they also differ in some aspects. For example the users of the information are different. Also the procedures for their preparations differ including the time frames. Cost accounting is another sphere of accounting that deals with the analysis of costs of products and activities in an organization. It forms a substantial part of managerial accounting since through it, the management can also make decisions. This paper analyzes the similarities a swell as differences between the two. Introduction Management accounting is and accounting system that provides the management with techniques that provide of an organization with information for purposes of internal use like decision making and effective control of the organizations resources. According to Enotes website (2010), procedures in management accounting provide information for decision makers in a company. Contrary, financial accounting procedures provide information to external users like the shareholders of a firm, government agencies, and creditors to the firm. Management accounting reports are usually generated anytime; daily, weekly, monthly, or quarterly. While individuals in an organization decide management accounting methods, financial accounting techniques must conform to external standards like the international financial accounting standards developed by financial accounting standards board (FASB). Cost accounting is often confused with management accounting. Cost accounting involves determining the cost of an activity while management accounting goes beyond to combine multiple management disciplines that contain financial information for internal decision making. Therefore cost accounting can be said to a necessary component of management accounting (Enotes website, 2010). Characteristics of management accounting procedures According to netTOM website (2010), management accounting procedures should posses the following procedures. They should be; Relevant for the purpose, complete, accurate, clear and precise to the manager, timely, communicated through the appropriate channel, less costly to provide and the volume should be manageable. The role of management accounting Management accounting plays the following roles within an organization: Planning: the information provided by management accounting procedures is vital in planning and budgeting processes. This is because such information contains various costs like pricing, product costs and capital expenditures. Control: the management is in a position to see which activities are not conforming to the plan from the reports provided by the management accounting (netTOM website, 2010). Organization: the management accountant can reinforce the organizational framework of the organization by tailoring the accounting structure to the organizational structure. Motivation: the managers and other staff are always motivated by the budgets prepared by the management accountant. Decision making: this is one of the major functions of management accounting procedures. Through the collection and analysis of data, the reports he or she presents to the managers assist in decision making (netTOM website, 2010). Similarities between financial accounting and management accounting Despite the two fields having numerous differences, there also many areas of similarities as specified below; Certification: both fields emphasize on certification. For one to be certified, he/she must pass the exams that are concerned in each field of specialization. Certifications come in form of certified management accounting and certified public accounting (Ehoh website, 2010). Review of historical data: both systems prepare reports basing on historical data review. In financial accounting, this is for comparison purposes of the business between the present and the past, while for management accounting, it is for determining the current performance of the organization and to come up with a business financial forecast of the future (ehow website, 2010). Measurement of the currency: the unit of measurement in generation of reports in the two systems is the currency. The reports generated are thereafter used to give tangible information to business owners or show the financial state of the business. They can also be used to plan and generate the budget for the business (ehow website, 2010). Terminology used: both systems of accounting use similar accounting terminology. E.g. debits and credits are used in both systems to describe the money that goes out and the money that go in to the business respectively (ehow website, 2010). Techniques: the accounting techniques employed by both the systems are basically the same. E.g. the technique that is used to determine the actual cost of the product (ehow website, 2010). Differences between Financial and managerial accounting Although both financial accounting and management accounting provide information to the user for decision making, there are various differences between the two as summarized in the table below. Financial accounting Management accounting Information from Financial accounting system is used by external parties to the organization like the creditors, shareholders etc Information from management accounting procedures is for internal use by the organizational management. Financial accounting reports provide information on financial performance of an organization over a given period of time and the state of affairs for the organization at the end of the period. Management accounting reports are for planning and control activities and also for decision making in an organization. It is compulsory according to the law for limited companies to prepare financial statements. Management accounting reports have no legal requirement. Financial accounting statements are an end to themselves as they dwell mainly on the whole organization aggregating costs and revenues from different departments. Management accounting information can not be an end to a product but rather aid in decision making. Also management accounting may give focus to specific areas and not every department. Essentially, a historical picture of a past operation is presented by financial accounting procedures. In management accounting, both the historical past of the immediate past and a future tool for planning is given. Financial accounting records should be provided for at least a period of 12 months. There is no time limit for management accounting records. The international accounting standards must be followed in the preparation of accounting statement (financial accounts of various companies can be compared). I.e. Generally accepted Accounting Principles must be followed (GAAP). There are no strict rules to govern management accounting record preparation (no need to follow GAAP). The records are used by managers of the organization and therefore there is no need for comparison. A specific format specified by the IAS is to be followed in the preparation for financial statements. There is no specified management accounting format and therefore no specific statements should be produced. The nature of financial statements most often is of financial nature. Management accounting information not necessarily money related. It can also be non-monetary. (NetTOM website, 2010) Types of management accounting reports Since management accounting is a vital part of the planning tool kit, you can find the following managerial reports within SAC:   Variance analysis: this usually determines the standard, projections and actual costs of an activity. One key element to the companys benchmark is the difference between the actual and the standard costs, i.e. how much it can cost to produce the same computer chip by two different computer manufacturers. The organization can analyze its planning processes using the projections or estimate variance analysis. Through variance analysis, there is a special field called bottleneck accounting that examines the relative costs and the variances created through production bottlenecks (lovetoknow website, 2010).   Cost analysis: this is a type of managerial accounting that analyzes the exact cost of a product. This usually starts with finding out the cost of direct expenses like materials and labor. There are other sophisticated management accounting techniques that include analysis of indirect expenses. They include cost projection accounting, calculating opportunity costs and facility overheads. These techniques essentially analyze alternative ways in which the company could have invested the funds (lovetoknow website, 2010). Activity based costing: this type of costing technique analyzes the cost of activities basing on their cost rather than the product. Its advantage is that it allows for deeper analysis of the companys interconnected parts. This method divides products into; Unit- level activities (production of one unit). Batch level activities (cost per batch). Product sustaining activities. Facility sustaining activities. The above report indicates Normal Costing System Per Unite Costs Retrieved from: http://ivythesis.typepad.com/term_paper_topics/management_accounting_report/ Accounting reports prepared on profit performance for a company may also indicate some of the expected managerial accounting duties. The example below was drawn from ABC System Profit Performance. The example that follows indicates normal costing system profit performance. ABC System Profit Performance report retrieved from: http://ivythesis.typepad.com/term_paper_topics/management_accounting_report/ Normal Costing System Profit Performance report retrieved from http://ivythesis.typepad.com/term_paper_topics/management_accounting_report/ A business process like research development can be examined by either total cost analysis and/or cycle cost analysis. This is because both methods analyze the total expenses involved in a business activity. Therefore the two methods are very important n determining the companys profitability (lovetoknow website, 2010). Return on investment: this is a type of cost analysis that includes cost analysis naturally while measuring the direct returns as well as calculating the ratio (lovetoknow website, 2010). Projections: this include future estimate of the organization such as; demand, sales, expenses, necessary resources and the number of required employees. Projections form one of the most complicated areas of managerial accounting because of the difficulty ion predictions caused by inflation, consumer demand and material prices. Therefore, they are built on extensive modeling. Balanced scorecard: this usually includes standard financial measures. These measures include on perspectives of the customer on satisfaction, business process, innovation and perspective on learning (lovetoknow website, 2010). Digital dashboards: these are applications that are designed in the form of a cars dashboard to display critical business information. They provide needed information fat just at a glance. Through them, the manager is able to see the latest data about the company in the companys business contexts (lovetoknow website, 2010). Conclusion Management accounting and financial accounting are two major accounting systems used by various organizations. Despite their use, they are totally different. Whereas financial accounting is prepared after a certain period of time and used by external users, managerial accounting is prepared by the management accountant for internal use of the management and it has no specific format to be used hence no need for comparison with other organizations. The similarities of the two range from mandatory certifications, use of currency, terminology used to similar technology. Examples of managerial accounting reports available are the variance analysis, cost analysis, return on investment, projections and digital dash boards. References Ehow website, 2010: â€Å"Similarities of Financial and Managerial Accounting.† Retrieved on February 15, 2010 from: http://www.ehow.com/about_4853367_similarities-financial-managerial-accounting.html Enotes website, (2010). â€Å"Managerial Accounting.† Retrieved on February 15, 2010 from: http://www.enotes.com/biz-encyclopedia/managerial-accounting Lovetoknow website. (2010). â€Å"Managerial Accounting.† Retrieved on February 15, 2010 from: http://business.lovetoknow.com/wiki/Managerial_Accounting NetTOM website. (2010). â€Å"Financial and Management Accounting.† Retrieved on February 15, 2010 from: http://cbdd.wsu.edu/kewlcontent/cdoutput/TOM505/page11.htm

Pluto or Neptune Essay

   Dr. Derik Johnson is highly acclaimed for his knowledge and research in physics. He has done a lot of research on the force of gravitation, and has a very conclusive notion in his mind that if sun’s gravitational pull is so great that it can compel a system of 9 planets to rotate around itself, then objects on earth, which is relatively very near to the sun as compared to Pluto or Neptune, should also fall towards sun, and not down towards the centre of the planet. He defies Newtonian theory on gravitational pull. Years of concentrated research on this notion, enable him to make a device, which can reverse the gravitational pull on any object. His joy does not know any limits, on this achievement. This is a device, which has a flat surface and which can be held in ones hand. Once the flat surface is made to face the Sun for 5 minutes, it gathers enough energy to change the gravitational field acting on any body. So, if he points this device to a person walking on road, it would appear to him as if, the person is getting carried upwards. To a common person, this device appears as if it is a round mirror of 5 inches diameter, and nothing else. Dr.Derik’s close friend John Mathew, is a shrewd businessman with acute sense of business opportunities. It was because of this sense of turning innovations into business, that he was a very wealthy man today. As a close friend, he discusses Dr. Derik discusses his invention with John, who perceives a gigantic business opportunity in this device. Now, tons and tons of load can be lifted upwards, with this small device !!!!! No extra energy no extra efforts !!! His shrewd business mind tells him that cranes and lifting devices could be a thing of past, if this invention could be turned into a working, marketable product. Both work together, incessantly, to bring out a commercially viable product, which can make any object move upward, just by pointing towards it. This product creates as storm in the market, and becomes an outright success. It becomes a minting machine for this duo. This run for minting money through this product, did not last long. Barely within a few months of its existence, reports of varied misuse of the product started flowing in and making headlines in the news channels and papers. While it proved very beneficial to the industry which had real time applications, it became a nuisance for others. Mrs. Alice, the head of an NGO, filed a law suit against this company, on behalf of a young girl, Edwina. It so happened that a boy studying with Edwina was madly in love with her, and wanted to marry her. Edwina was in no mood to agree to his proposal, and had been rejecting this boy consistently. So, this boy, uses this device, to shoot a small clip, with her walking above the surface of the earth. Since she was wearing a skirt at that time, the camera was able to shoot her private parts also. This was obviously very embarrassing to Edwina. Her MMS clips started circulating around the campus, then the town and then to the whole world through the internet. Edwina reported this case to Mrs. Alice, who was very upset at knowing her story. She approached the courts, and filed a law suit against the manufacturers, demanding a very heavy penalty in favor of Edwina, and immediate withdrawal of all the products from the market, and closing down the manufacturing unit. The court, decides to withdraw all the products from the market, pay heavy compensation to Edwina, but does not order closing down of the manufacturing unit. Instead, it issues an order that the product could be marketed to genuine customers only, who have to obtain a license to buy this product. The court also orders Dr. Derik to improvise the design in such a way that only a person with very high technical skills can use it. ( Dear customer : the resemblances are as follows : Dr. Derik – Dr. Frankenstein, the product – the monster, Edwina- William who was the victim, John- Henry, and Mrs. Alice- Elizabeth). Reference: 1) Victor Frankenstein, Wikipedia the free encyclopedia, retrieved on 5 january 2008 from : < http://en. wikipedia. org/wiki/Victor_Frankenstein >

Case Study: Out-Of-Town

This case study will examine four parts of out-of-town brown and the besieged probation supervisor. The first is what should Casey’s response be to the reporter concerning the agency’s recommendation. The second is if Casey elects to discuss her officer’s recommendation for some form of intermediate sanction, how can she justify such sanctions in general and in this case specifically. The third covers do you feel that the probation officer’s recommendation based on these facts is correct, why or why not.Lastly, which form of intermediate sanction would appear to hold the most promise for the offender in this case. Casey’s Response I would answer the phone and answer question with a brief conversation. I am standing by the decision the probation officer has recommended. The intermediate sanction is proper decision for a 23-year-old man who murdered his stepfather with a knife after suffering many years of physical and mental abuse. The young man had no prior record and had been an incest victim since he was 5 years old; he is considered an otherwise nonviolent person, a low recidivism risk.However, this call that I receiving from you, a well-known veteran local television anchor—a strong crusader in the local war against crime, is to deter me from agreeing with the probation officer. I know you know the young man will be sentenced tomorrow, but I want you to answer a few questions. Have you ever done something in your life where you could have been sent to prison? Don’t answer because I know the answer. Did this young man do something against society? Yes, he will and has payed for his crime. Intermediate sanctions are criminal sentences that fall between standard probation and incarceration.Intermediate sanctions can include house arrest, intensive probation, boot camps, electronic monitoring, and drug treatment programs. Intermediate sanctions serve a dual purpose in the criminal justice system. The reason I am agreeing with this sentence is because intermediate sanctions versus incarceration assist overcrowding and eases the burden from the prison system in the United States. I'd rather give him a chance than another prisoner who has killed several people for no apparent reason. The young man has been dealt horrible hand in life, and I think he can benefit from this sentencing.I think if this was your child, brother or even you would want a second chance. It is time for someone to help this man so he can become a productive citizen. The person without any sins shall cast the first stone. Society will get its justice, but a man will receive another chance at life. The agency has to make decisions that will be beneficial to society and the prison system. The sentence is not letting the young man go free, but he will sever in least restrictive setting to pay for his crime. Officer’s Recommendation And Such SanctionsThe 23 year-old-man who murdered his stepfather, after many years of s uffering mental and physical abuse, deserves an intermediate sanction. The probation officer has taken into account the entire situation to make this recommendation. The man’s several years of constant abuse, prior criminal record, and nonviolent characteristic outside of the incident are indications that the man may not react well to being in a prison. Intermediate sanctions are community-based corrections that are more restrictive than probation and less restrictive than prison (Potter, 2005).Intermediate sanctions are still effective because it incapacitates offenders enough to make committing new crimes extremely difficult, it is a deterrent to the desire to commit new crimes, and it protects the community (Peak, 2010). There are several options to employ to ensure the community is safe, and the offender is closely monitored. Intensive supervision, home confinement, electronic monitoring, and community correction centers are all different options that would be sufficient sanctions for the man and the community.There are several benefits to using some form of intermediate sanction for this case and future cases to come. Intermediate sanctions are cost-effective versus housing an inmate in prison or an institution (Potter, 2005). The offender has the ability to live in the community, contribute to the community, and receive support or treatment from treatment programs. By removing the prison facility from the equation, recidivism is reduced because offenders do not have to reintegrate back into society (Potter, 2005).Currently, this community is focused on the war on crime. The act that the 23 year-old-man committed is undoubtedly criminal. Furthermore, this department is committed to doing what is right. However, the 23 year-old-man is not the person to imprint retribution because he is also a victim. The intermediate sanction is not letting the man get off easy; he will still receive supervision and most importantly treatment. The man can make a pos itive impact on the community through community service and further supporting the war on crime.Probation Officer’s Recommendation I do not feel that the probation officer’s recommendation of â€Å"intermediate sanctions† is appropriate for the 23-year-old man. Although I do see that the young man was physically and mentally abused for years as he was also a victim of incest since he was five, he is still an adult. We also know â€Å"The young man had no prior record and had been an incest victim since he was 5 years old; he is considered an otherwise nonviolent person, a low recidivism risk† (Peak, 2010).I feel that the young man should receive jail time and not just intermediate sanctions. If he were a 13-year-old boy intermediate sanctions may be appropriate, but seeing that he is an adult I feel that jail time as well as intensive therapy and counseling is entirely necessary for him. The individual, although not stated, may definitely know the differe nce from what is right and wrong in life and he may have been able to at least get away from his father or notify the police of what his father has done to him and has been doing to him since he was a child.In some instances the individual may have been reliving the situations that his father had put him through and this may have triggered his response to kill his father; the crimes he committed are also violent in which I also believe intermediate sanctions is not appropriate for the young man. Knowing that the situation could have been handled a lot differently, the young man may not have killed his father and his father could have been the one incarcerated leaving the young man to seek therapy and counseling for his scarring of childhood.Since the young man was the victim to his father in previous and possibly current years, I feel that the individual should receive a sentence of voluntary manslaughter since he committed a crime without premeditation and leading to the murder he had a prior history of mitigating factors. â€Å"Mitigating factors show that the defendant poses less risk to society tha otherwise, so a lengthy sentence is unnecessary. Typical mitigating factors include the lack of a criminal history and the defendant’s acceptance of responsibility for the crime† (Thomson Reuters, 2013).While the individual receives his sentencing, it is vital that he also receives intensive therapy and counseling to help him cope with his actions as well as to cope with his prior history of being a victim. Having therapy and counseling can help the individual to adjust to his new environment and also be relieved mentally of being abused as a child physically and mentally as well as being a victim to a disgusting crime of incest as a child.It is sad to say that he went from being the victim to the murderer when things could have ended up differently for him and his now deceased father. Intermediate Sanction Intermediate sanctions focus primarily on nonviolent offenders, in order to reduce the costs of lengthy prison terms and to reduce the amount of individuals housed in prisons for minor offenses. In addition, some intermediate sanctions provide offenders with treatment options that the prison system is not capable of providing because of the current budget.In light of the recent increase in the prison population, certain alternative sentencing options currently exist in the criminal justice system. â€Å"Because many States are concerned about the fiscal ramifications of recent increases in sentence lengths for violent crimes, the combination of sentencing guidelines and intermediate sanctions has been seen as a cost-effective means to direct violent offenders to appropriate prison sentences and many nonviolent offenders to appropriate community sanctions† (Tonry, 1997, pg.7).In the case of the twenty-three year old man who murdered his stepfather, the intermediate sanctions alternative would normally not apply to su ch a case. In consideration of the current facts pertaining to budget issues within the criminal justice system, perhaps certain exceptions are of consideration in this case taking into account the offender’s previous record. The form of intermediate sanction that would hold the most promise for the offender in this case would be shock probation/parole.Since the offender has no previous record of any kind and considered a nonviolent person, based on his previous record, and is at a low risk for reoffending, and the individual does not pose an initial threat to his community. The â€Å"shock† probation form of intermediate sanctions provides the offender, in this case, with a brief exposure to prison life over a few months (which the offender in this case will not be comfortable with in relation to his non-existing criminal record). This sanction will allow the judge to reconsider initial sentencing and bring the offender before the judge to determine the outcome of the sentence.The overall concept of shock probation is to deter individuals from potential criminal behavior in the future, and provide the individual with a taste, so to speak, of what is in store for the offender if he decides to pursue a criminal life-style (Peak, 2010). Under the â€Å"shock† probation sanction, individuals’ need to obtain a sponsor within the community who will take responsibility for the offender’s actions, while communicating directly with the probation officer. Deming the applicant as a nonviolent person, the offender should have no problem obtaining a sponsor within the community.The selected sponsor is responsible for providing resources to the probation officer, such as providing transportation, compliance, and with legal standards, such as curfew and other restrictions, and to assist the individual with adequate shelter and maintain employment if necessary (Peak, 2010). Conclusion By understanding this case study it allowed for us to ex amine the four key parts around Casey’s response in relation to the Probation Supervisor. By evaluating all aspects of this case study we were able to identify with Casey’s point of view.When looking at any kind of response to the media, it shows you must be collective and precise in what you disclose. With the incorporation of the Probation Officer’s recommendation, intermediate sanctions are required in order for correct proceedings to be in effect. Fiscal ramifications often pose diminshing effects to the intermediate sanctions. Taking all these points of views into consideration, one will have more information to evaluate when determing interaction with the media and Probation Officers.

How to Pass a Test

We sometimes spend so much time using flashcards and memorizing terms that we dont get around to really  gaining a deep understanding of the material were supposed to be  learning!  The fact is, many students dont realize that there is a difference between memorizing and learning.Memorizing terms and definitions may help you prepare for some types of tests, but as you advance into higher grades, youll find that teachers (and professors) expect a lot more from you on test day. You may go from providing definitions to words in middle school, for example, to more advanced types of responses like long answer essays when you reach high school and college. For those more complex question and answer types, youll need to be able to put your new terms and phrases in context. There is a way to know if youre really ready for any test question the teacher can throw at you. This strategy is designed to help you take the knowledge youve gained about a subject and explain it in context And you can learn this strategy in three steps! First, develop a list of all the terms (new words) and concepts contained in your material.  Find a way to randomly pick two of these terms. (No picking and choosing!) For example, you could use index cards or scraps of paper to write the term on one side and then place them face-down. Then select two different cards. The strategy works best if you actually manage to pick two (seemingly) unrelated words.Now that you have two unrelated terms or concepts, your challenge is to write a paragraph (or several) to show the connection between the two. It may seem impossible at first, but it is not!Remember that any two terms from the same class will be related. You just have to create a path from one to the other to show how the topics are related. And you cant possibly do this unless you really know the material. Tips for Passing Your Test Repeat the process of selecting random terms until youve done several different combinations of terms.Every time you write your paragraph(s) to connect the terms, use as many other terms as you can. You will begin to build a web of knowledge and begin to understand how everything relates to everything else in your notes.Once youve studied this way, follow up with a friend a day or two later. Use a study partner and write up practice essay questions and exchange them. Make sure that each answer contains at least two of the terms youve practiced.