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