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Accounting Information
A senior executive in a Fortune 500 firm along with their colleagues on the company's management team are dependent on accurate, timely, and pertinent financial information regarding the health of the organization. Accounting information has aptly been described as "the language of business, which is used in the management, planning, control, and decision- making processes integral to achieving organizational objectives" (Marshall, D. & McManus, W. 1996). In this regard accounting information falls into distinct categories: financial and managerial accounting; yet with considerable overlap in their utilization by management. Explication of these accounting areas provides considerable insight into their utility in providing effective quantitative data for analysis.
Financial and Managerial Accounting
Financial accounting concerns itself with the "preparation and reporting of financial statements for an entity" (Marshall, D. & McManus, W. 1996); while managerial accounting "is concerned with providing information to managers- that is, to those...
The bifurcation of financial and managerial accounting is mostly concerned with their respective users; the former "is aimed at providing information to parties outside the organization (Investopedia.com. N.D.), the latter is "aimed at helping managers within the organization" (Investopedia.com. N.D.). Yet this structuring ignores the considerable importance of financial accounting for internal members of the company, specifically the interpretation of the financial statements as to the economic welfare of the organization.
Financial Accounting
Financial accounting's most recognizable information is the financial statements: balance sheet, income statement, statement of cash flows, and statement of change in owner's equity; each providing critical information regarding the financial vitality of the organization. The balance sheet "lists the organization's assets, liabilities, and owner's equity at a specific point in time" (Marshall, D. & McManus, W. 1996). The income statement…
Likewise, managerial accounting also utilizes financial data to reach conclusions as to how the company is operating and what if any corrections are necessary to enhance profitability. In this vein managerial accounting concerns itself with the analysis of costs, budgeting, performance, and capital expenditures. Managerial accounting information is highly detailed and provides a platform from which to judge the company's revenue creation and its cost controls. As examples, an executive management team might take considerable time analyzing activity based-costing; a "system identifying the activity that causes the incurrence of a cost" (Marshall, D. & McManus, W. 1996). This data could lead to a discussion on the company's operating leverage based on their orientation of fixed or variable costs. While both financial and managerial accounting provides detailed data concerning company performance, managerial accounting has a distinctive narrowness to its scope of focus.
Communication of Information
With volumes of financial information generated by a Fortune 500 firm's accounting department, the question becomes how
Accounting System Accounting Information System The following plan details the business areas and services to be provided for a growing homeowners' association by a certified accounting firm. The large growth in size of the association is cited as a need for this contracting with the accounting firm, and the specific business areas in need of servicing are identified as billing, collections, payments, reporting, taxes, and miscellaneous advisory duties. Input, output, and control
Ethical Issues in AIS Ethical Issues in Accounting Information Systems This essay examines ethical issues in accounting information systems as presented in the case of DHB Industries. Now known as Point Blank Solutions, the company, which supplied body armor to the U.S. military and law enforcement agencies, was charged by the SEC on March 1, 2011 for engaging in "massive accounting fraud" (SEC, 2011). The agency filed separate charges against three of
Role of Accounting Information in Decision Making Process Accounting information plays an influential role in guiding decision making process in an organization. Our research shows that not all organizations would use accounting information in the same manner even though they might all utilize it for making better decisions. However some organizations might limit those decisions to the area of cost control while others would be comfortable using accounting information for making
Accounting in British Petroleum Scope, Aims, and Objectives The research project proposed herein will examine the role of accounting in the past progression and current situation of British Petroleum, the company that came under intense public scrutiny last year due to the Deepwater Horizon oil spill that occurred in the Gulf of Mexico (Urbina 2010). In the ensuing year since the accident in the Gulf, however, interest in BP and its internal
Accounting and Intrusion Detection In a report issued by Paladin Technologies, Inc., entitled: "Security Metrics: Providing Cost Justification for Security Projects," 273 organizations were surveyed on the topic of security. The report illustrates in quantifiable terms the depth and reach of intrusion detection on the financial viability of the organization. The combined reported losses from the firms surveyed totaled $265.6 million in 1999. The highest loss categories were reported as follows: Type
This process has been ongoing since then. One of the major differences between the two standards is going to be that whereas GAAP emphasizes rules, the IFRS is a principle-based approach. Implementing a principles-based approach has significant implications for American tax practice. Many of the specific differences between the two systems will have a direct impact on tax practice. In IFRS, LIFO is prohibited and inventory write-downs may be reversed