Question

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Managerial accounting is not mandatory, whereas financial accounting is mandatory and highly regulated in publicly traded corporations. Management accountants must be ethical and know financial accounting as well as many other things in order to add value to the business. Typically it is managerial accountants that provide guidance for management decision-making.

Chapter one is about cost accounting terminology and strategies. In order to be profitable, it is important to understand the costs in a business.Talk about and explain this topic.

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Answer 1

There are three main accounting techniques which are used widely for different purposes they are financial accounting, managerial accounting and cost accounting. The three accounting techniques are equally important.

Financial accounting helps to find out the financial position of the firm and analyse where it stand financially compared to other firms. This is helpful for the stakeholders and investors to know about the financial stability of the firm and to decide whether to invest in the firm or not and to know that their funds are at a safe position. Therefore it is used for external purposes. It uses only quantitative data. Financial accounting follows the double entry book keeping system, which means every trancsaction affects atleast two accounts.

On the other hand managerial accounting is a broader term and is mainly used for making decisions in the company. Managerial accounting is used for internal purposes for the managment to analyse that the policies are being implemented accoriding to the goals set by the managment. It deals with qualitative data and quantitative data.it is used by large organisation where managerial decisions play a big role.

Cost accounting is a branch of accounting which helps to analyse the cost of a product and execute measures to control and minimise it. It helps to make decisions related to cost of raw materials, overheads and labour. It provides information to the internal organisation and uses quantitative data. Cost accounting helps to take make or buy decisions and execute those plans which are profitable.

The three accounting system has its own use and are used for different purposes. Even though financial accounting is more basic and widely used Managerial accounting is more wide and have more scope. Cost accounting helps an organisation to lower its cost and increase its profit.