Managerial Accounting Qs

Give two examples of financial information and nonfinancial information?

Financial information includes amounts that can be expressed in dollar amounts such as sales, net income, and total assets. It also includes ratios prepared using financial information such as the percentage increase in sales, return-on-sales, and return-on-investment. Nonfinancial information includes measures that are not expressed in dollar amounts. For example, nonfinancial measures of customer satisfaction include the number of repeat customers or ranked estimates of satisfaction levels. Nonfinancial measures of production quality include percent of on-time deliveries, the number of defects, and production yield.

What is the purpose of management accounting?

Management accounting gathers short-term and long-term financial and nonfinancial information to plan, coordinate, motivate, improve, control, and evaluate success factors of an organization. Management accounting converts data into usable information that supports planning, organizing, and control decision making.

Is financial accounting or management accounting more useful to an operations manager? Why?

Management accounting is more useful to an operations manager because management accounting reports operating results by department or unit rather than for the company as a whole, it includes financial as well as nonfinancial data such as the number or percent of on-time deliveries and cycle times, and it includes quantitative as well as qualitative data such as the type of rework that was needed on defective units. It also provides information to control operations; it measures and evaluates existing systems to identify problems.

Compare and contrast the users and uses of management accounting and financial accounting?

Management accounting provides information to internal decision makers of the business such as line supervisors, division managers and top executives. Its purpose is to help managers plan, organize, control and make operating decisions by predicting future results and evaluating performance. Financial accounting provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of the company for use by these parties in making investing and credit decisions.