How do you response to the following discussion post from a classmate? Please pr

Question

How do you response to the following discussion post from a classmate? Please provide an answer and reference. Thank you in advance!

In my earlier ACC 212 course, I had the opportunity to prepare an income statement, balance sheet and schedule of cost of goods manufactured for a manufacturing company and perform some calculations. The material I covered in this module has point out the relationship between finance and managerial accounting within economic activities that a company would have to viewed and evaluated and make good decisions.

With the several website research and the material I covered in chapter 3, I learned the primary users of financial information are external users, such as investors, creditors, and government authorities (Ross, Westerfield, & Jordan, 2013). The external users make investment and lending decisions based on a company’s financial statements. Financial book-keeping reports historical data of the company, and the information must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) (Ross, Westerfield, & Jordan, 2013). Companies are mandate to formulate financial statements quarterly or annually.

On the other hand, managerial accounting, focuses on internal side of the company, such as managers and employees (Miller-Nobles, Mattison, & Matsumura, 2014, p. 129). The information in the financial statement is intended to help managers with planning as it help investors with investing. Managerial accounting does not follow GAAP guidance and the internal reports are more detailed than the external financial statements (Miller-Nobles, Mattison, & Matsumura, 2014, p. 129). The application of both courses material have help me to grasped the big picture within the financial statements and how are used to make decisions for a business.

Reference:

Miller-Nobles, T. L., Mattison, B., & Matsumura, E. M. (2014). Horngren's financial & managerial accounting: The managerial chapters.

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2013). Fundamentals of Corporate Finance (10th ed.). Irwin: McGraw-Hil

Explanation / Answer

It is true that the financial statements are more useful to external users and managerial accounting is useful for the management. The financial information is beneficial to external users such as customers and investors since there are various aspects such as liquidity position and capital structure of the business which helps them in assessing the performance of the company.The internal users such as employees and management use accounting and managerial information to make decisions such as deciding upon future course of action by the business.

Financial Accounting Terms Dictionary of Definitions . (2018)

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