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Extra info for Accounting: An Introduction, 4th Edition
1). The difference in their targeted users has led to each strand of accounting developing along different lines. The main areas of difference are as follows. ● ● ● ● ● ● Nature of the reports produced. Financial accounting reports tend to be general purpose, that is, they contain financial information that will be useful for a broad range of users and decisions rather than being specifically designed for the needs of a particular group or set of decisions. Management accounting reports, on the other hand, are often specific-purpose reports.
Other users would be interested in receiving information relating to the future, such as the planned level of profits and non-financial information such as the state of the sales order book and the extent of product innovations. The distinction between the two areas of accounting reflects, to some extent, the differences in access to financial information. Managers have much more control over the form and content of information they receive. Other users have to rely on what managers are prepared to provide or what the financial reporting regulations require must be provided.
These aspects include: ● ● ● ● how how how how financial reports should be read and interpreted; financial plans are made; investment decisions are made; businesses are financed. qxd 18 7/08/2007 CHAPTER 1 11:20 Page 18 INTRODUCTION TO ACCOUNTING AND FINANCE Many, perhaps most, students have a career goal of being a manager within a business – perhaps a personnel manager, production manager, marketing manager or IT manager. If you are one of these students, an understanding of accounting and finance is very important.