Financial Accounting Case Study

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1-1 How does managerial accounting differ from financial accounting? Managerial accounting is providing information to internal users, for example manager, employee. Moreover, it is a report help manager to plan, control, and make better decisions in order to achieve organization’s goal. The main goal is to improve the efficiency and effectiveness of existing operations. However, financial accounting is oriented in producing financial statements and other financial reports to external users such as investors, government and shareholders. It is a report based on past information. Financial accounting is regulated by Malaysian Accounting Standard Board (MASB) and Securities and Exchange Commission (SEC). 1-4 Why do companies prepare budget?…show more content…
The three major activities of a manager are planning, directing, controlling. Planning is setting a long term and short term objective and decide how to achieve it. Directing is how best in arranging tasks, people and other resources in order to accomplish the plans. Besides, controlling is implementing plans and monitoring the use of feedback in order to meet the firm’s objectives. 2-3 What are the major differences between financial and managerial accounting? Financial accounting Managerial accounting Users External people who using for make financial decisions Manager who using for planning, controlling, and decision making Time focus Historical perspective Emphasis on future Subject Primary focus is on the whole organization Focus on segments of an organization GAAP Must follow GAAP and prescribed formats No need to follow GAAP or any prescribed formats Verifiability versus relevance Emphasis on verifiability Emphasis on relevance for planning and control Precision versus timeliness Emphasis on precision Emphasis on timeliness Requirement Mandatory for external reports Not mandatory 2-4 What are the three major elements of product costs in a manufacturing…show more content…
So, variable costs cannot be differential costs and I disagree with this statement. 3-1 Distinguish between (a) a variable cost, (b) a fixed cost and (c) a mixed cost. (a) Variable cost is the cost change in proportion to the quantity of output or the sales revenue of a company. The company’s production volume will affect the variable costs, when they rise as production expand and when they fall as production contracts. Variable costs also are the sum of margin costs over all units produced. Variable costs include raw materials, sales commissions, labour, credit card fees and so on. Variable costs different from fixed costs, which remain the same even as production and sales volume changes. (b) Fixed cost is the costs that independent of quantity of output changes. It does not affect with any increase or decrease in sales volume or other activity levels. Fixed costs will not be zero when production is zero. Fixed costs are frequently used into cost accounting. Fixed costs include rent, insurance, salaries, interest, property taxes and so on. It is one of the two components of the total costs of running a business, along with variable

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