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What is the relationship between cost accounting financial accounting and managerial accounting?
Financial accounting relates to the information presented based on past events and records.
Cost and managerial accounting is the presentation of financial information to the management to be used in decision making while in managerial accounting projections are made based on past trends.
Financial accounting relates to the information presented based on past events and records.
Cost and managerial accounting is the presentation of financial information to the management to be used in decision making while in managerial accounting projections are made based on past trends.
What is the difference between cost accounting management accounting and financial accounting?
For simplistic purposes, there is not much, if any, difference between "cost accounting" and "management accounting". These terms refer to the accounting techniques used internally by a company's management to determine the costs of running the business and help in decision making. For example, reports that compare budgeted to actual expenses are commonly used to monitor the successful management of a specific department or store within a larger enterprise.
Financial Accounting refers to accounting practices that result in financial statements used by various stakeholders of the business. Stakeholders may include management and employees, as well as vendors, suppliers, customers, bankers and regulators. The accounting practices used in compiling financial statements are referred to as "GAAP" or the generally accepted accounting principles as set forth by the Financial Accounting Standards Board in the U.S. In the U.S., external financial reports issued by public and/or regulated companies must comply with GAAP.
Some accounting methods used in cost accounting are not recognized by GAAP and therefore can only be used internally.
Where the financial accounting fails the cost accounting for is rescue but still there are some limitations deficiencies in the system?
Accounting has been a part of today's life in today's environment and it has to be given more progress because it is very important
What are the effects of international accounting standards on accounting practices of developing nations?
Adoption of international accounting standards is extremely costly. Developing counties usually use accounting standards that are most beneficial to them (based on who they trade with to ease accounting for transactions) or just another country's GAAP that works for the developing country. Ex. Mexico very closely resembles U.S. GAAP because of NAFTA and the quality of U.S. GAAP.
Should IFRS be implemented in developed counties, developing counties might be forced to adopt them as well in order to maintain trade relations. This could be extremely costly for smaller developing counties.
Does the accounting system appear to facilitate one specialty from financial, auditing, or cost managerial or tax accounting over the others?
The elegance of Accounting is that it is a purveyor of information, organized into systems, and exploited for a particular purpose. That is because Accounting is vague. Interestingly, information from accounting can be split into to methods: 1. Valuation 2. Evaluation
1. Valuation - This is the type of information that financial/Tax/Cost accounting attempts to tackle. What is that worth? How much of it came from this source of value? What will be the asset be worth in ten years? All of these questions are valuation methods and accounting provides an informational standpoint from which to analyze these questions and ascertain an answer to them.
2. Evaluation - This would be your classical managerial accounting. Did employee A provide hire effort? What should compensation look like? How are we performing? All are evaluation questions. Evaluation is especially important to Internal Audit and the control environment. You can easily image a professor conducting evaluation accounting to assign proper reward to students who exhibit learning through testing.
What is the difference of Cost Accounting and Financial Accounting?
Financial accounting encompasses all account presented on the face of the financial statement, its presentation, recognition, measurement and disclosures. Where as cost accounting is only focused on the cost of inventory.
What is the distinction between cost accounting and management accounting?
Cost accounting is concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement.
Management accounting relates to the provision of appropriate information for decision-making, planning, control and performance evaluation.
What is the difference between financial accounting and management accounting?
Very briefly, the difference has to do with the needs of the user.
Management accounting for is the internal users of an entity and Financial Accounting is for the external users.
Internal users (management) may be interested in the cost of making an item using process A versus process B. Whereas External users are mostly interested in the overall results of those management decisions.
What is the difference between the accrual accounting and cash accounting?
The Cash Basis of accounting reports only transactions that have been completed in the current reporting period - or - what has "hit" the checking account (assuming all funds are deposited and disbursed only from that account) - The Accrual Basis of accounting reports all transactions that the entity has entered into and includes the asset, liability, income and expense related them.
In addition, the Cash Basis of accounting is considered OCBOA (Other Comprehensive Basis of Accounting ~ Other than GAAP) and the Accrual Basis (when implemented properly and fully) is considered GAAP (Generally Accepted Accounting Principles).
EDIT - The Accrual Basis is more desirable from a user's standpoint as it includes transactions that may exist were completed after the report dates that were initiated prior to the report date. It is generally more complete and more reliable than the cash basis - however, that does assume that the person preparing the statements has expertise of, not simply a cursory working knowledge of, GAAP and the accrual basis. For example, a set of financial statements printed out of QuickBooks are not necessarily GAAP compliant (or correct) although they may appear to be at first glance or to a layperson.
When a company's accounting year-ends on a day that is other than the end of the calendar year what is called in accounting?
Fiscal year
Is there a difference between accounting for conversion of bonds and accounting for the conversion of preferred stock?
Bonds have discounts and premiums and accrued interest. Preferred Stock does not.
Is push down accounting accepted under generally accepted accounting standards?
Yes, in some cases. For example: The Federal Financial Institutions Examination Council (the "FFIEC") approved a reporting requirement, effective October 1, 1989, to use push down accounting in certain acquisitions of national banks, state member banks and insured state nonmember banks. This reporting requirement is an addition to the Glossary to the Instructions to the Consolidated Reports of Condition and Income ("Call Report").
Key Difference between Indian accounting standards and international accounting standards is..
In international accounting LIFO and extraordinary items are prohibited
What are the items that are to be debited in accounting and what are the items that are to be credited in accounting?
This depends on the nature of the account and the thing you wish to achieve. For example, to increase cash you would debit the cash account, but if you wanted to decrease it, you would credit it. There are all sorts of accounts and they have different normal balances.
The thing to remember is that every journal entry must have equal debits and credits. So for example to increase a contra asset account like Allowance for Doubtful debts you would credit Bad Debt Expense to increase it and credit Allowance to increase that!
Is an "account receivable" and "goodwill" real accounts in accounting?
Real accounts, i.e. Balance Sheet accounts are ongoing perpetual records and represent "real" items; cash, receivables, inventories, accounts payable, invested capital, etc., etc. Accounts receivable and goodwill therefore are both real accounts as they have value in and of themselves.
Nominal accounts represent items of income and expense. Nominal accounts have no balances at the beginning of an accounting period and change as various debits and credits are applied because of activity of income and expense throughout the accounting period. At the end of the accounting cycle, the nominal accounts are returned to zero by debiting them by an amount equal to their credit balance if such exists, or crediting an account if it has a debit balance. The offsetting entry of each of these is to a Profit or Loss Account. If after all accounts are zero, the P&L account has a debit balance then operations were profitable (income exceeded expenses), and conversely with a credit balance a loss was incurred. The P&L is then "closed" by either debited or crediting to bring it to zero, whichever is appropriate, with the offsetting entry going to "Retained Earnings", a real account, and bringing the Balance Sheet into balance and leaving all nominal accounts at zero.
To put it another way if all debits and credits of the General Ledger are added up, then they will both be equal. However, if only the debits and credits of the nominal accounts are added up there will be a difference and that difference, depending on whether it is a credit or debit will be the profit or loss. Similarly, if the debits and credits of the real accounts are added they will be different by the identical amount of adding the nominal accounts only opposite.
Why do users of accounting Information need accounting information?
External users of accounting information (especially investors) use accounting information like annual and quarterly reports to base their investing decisions on, and to compare different companies with one another.
Internal users of accounting (mostly managers) use internal accounting information in order to plan.
What is an EA in accounting?
EA stands for Enrolled Agent. It is a certification by the Internal Revenue Service given to those qualified to practice before them. To become an EA, one must pass a test given by the IRS, the purpose of which is to try to ensure that only qualified people practice before the IRS. You may not be a Power of Attorney for the IRS unless you are an EA or some other certified individual such as a CPA or an attorney.
What is accounting?
Accounting is a method or system used to keep track of and determine the financial status of a person or company's income/assets and outlay of money/possessions. (An Accountant engages in Accounting: "The occupation of maintaining and auditing records and preparing financial reports for a business"
Who uses accounting?
Taxpayers like to use accounting
What is 'account' in accounting?
A account is the method used to visualize the debit credit accounting procedure. The account can represent any account regardless of expense, revenue, asset, or liability. The debits are placed the left side and the credits on the right.
What are the different branches of accounting?
Following are different branches of accounting:
1- Cost Accounting
2- Financial Accounting
3- Management Accounting
Is financial accounting necessary?
Yes, the accounting calculates the cost of capital to the business. It compares the current, expected, and historic rates of return. Suppose a company is making 12% returns but borrowing money by using the owner's credit card at 22% be good to know that.
What is fair value accounting?
Fair Value accounting is an accounting term that requires a company to place a value on all of the assets on its balance sheet that, it is the price at which the assets could be sold. This is easy to do when the asset has a quoted market price. However, it is often the case that there is no liquid market for an asset, and thus the company has to make an estimate of fair value. When the marketplace is in turmoil and illiquid, as it has been for much of 2008, companies are sometimes forced to place a very low value on an asset, resulting in a substantial markdown from the prior value. See related links for complete explanations.
What are accounting principles?
The Accounting Principles are the assertion rules of accounting and the application of these rules, method, & procedures to actual practice of accounting. These Accounting principles have been divided into
A. accounting concepts
B. accounting conventions
What is fiduciary accounting?
Proper accounting for property that is entrusted to the fiduciary acting under the conditions set forth in a deed
What are the uses of journal in accounting?
The journal is most commonly used to record corrections to errors that have been made in writing up the general ledger accounts
What does "overhead" mean in regards to accounting?
It is to describe costs of running a business, e.g. rent rates and salaries
What are accounting entities?
Accounting entities are for example a business do not get these mixed up with legal entities
What is an accounting transaction?
An accounting transaction is the exchange of request/response messages to perform accounting. Accounting can be performed in the form of accounting transactions that report on resource usage by a session. Accounting transaction can occur during a session if accounting or charging indications are needed [p&l based acct] or only at the start and the end of the session.
What is accounting ethics?
Accounting ethics is primarily a field of applied ethics, the study of moral values and judgments as they apply to accountancy. It is an example of professional ethics.
What does the abbreviation 'dr' mean in accounting?
'Dr' means Debere in Latin stands for 'what comes in' or in simple words whatever assets the business owns or the expenses it has to pay comes under debit.
While 'cr' means credere in Latin means 'what goes out', in simple words whatever liabilities business owns, or the income it earned during the year comes under credit.
What does the abbreviation 'm' mean in accounting?
It has come to mean one million in general usage, although it used to mean one thousand (and one million was abbreviated "MM")
What is computerized accounting?
Accounting is the method in which financial information is gathered, processed, and summarized into financial statements and reports.
The purpose of accounting is to provide information used in decision-making. Accounting may be viewed as a system (a process) that converts data into useful information.
Information processes include:
· Recording
· Maintaining
· Reporting
Every business has numerous processes. Some are simple, others complex and cumbersome. However, as the business grows, acquires new customers, enters new markets, and keeps pace with constant changes in statutory regulations... the company will need to maintain highly accurate and up-to-date accounting, inventory, and statutory records.
This is where a computerized accounting helps simplify, integrate, and streamline all the business processes, cost-effectively and easily.
What is normative accounting?
Normative Theory is a theory that prescribes how a process of accounting should be done. This theory is not based on observation and may suggest radical changes to current practices in accounting
What is accounting normalization?
It is removing items from the income statement or balance sheet that do not normally occur during the course of business to better estimate the value of a company.
Why are Accounting Standards necessary?
Accounting standards are necessary to promote high quality financial reporting. The fundamental role of accounting is to communicate economic information about businesses and other organization to various stakeholders including government, investors, shareholders, suppliers, lenders, customers, and the public. These stakeholders use such information to take decisions and to assess the stewardship of people appointed to manage such organizations. If this information were not of a high quality standard, then the stakeholders would be unable to take effective decisions that will benefit them. For example, if a financial report were manipulated to show higher profits, investors would hold on to their shares with the belief that the company is doing well.
Accounting standards came to be developed from the mid sixties onwards to promote the integrity of the accounting profession by way of ensuring uniformity in the way accountants report transactions in their books and in their preparation of the final accounts of businesses. This is largely aimed at boosting the confidence of stakeholders, particularly shareholders and potential investors in the accounting profession.
Good and useful information should have the essential characteristics of understandability, comparability, relevance, and reliability in order to play its role effectively.
Accounting standards serve to promote the understandability, comparability, relevance, and reliability of financial reports.
What is Use of statistics in accounting?
Well, in many accounting situations, there is too much data to go through all this. For example, if we are looking about Ford motor corp., and looking at some specific data, their may be too much to analyze, so we take a sample. Then we need to know how big a sample to take so we can say with 95% confidence that our results are representative of all the data.
Statistics tells us what sample size we need.
What are the 4 phases accounting?
1. Recording
2. Classifying
3. Summarizing
4. Interpreting
What is accounting management?
Accounting Management (Business) is the practical application of management techniques to control and report on the financial health of the organization. This involves the analysis, planning, implementation, and control of programs designed to provide financial data reporting for managerial decision-making. This includes the maintenance of bank accounts, developing financial statements, cash flow, and financial performance analysis. Accounting management is a mandatory knowledge module of any MBA program.
Accounting (IT) management: Accounting is often referred to as billing management. The goal is to gather usage statistics for users.
Using the statistics the users can be billed and usage quota can be enforced.
Examples:
· Disk usage
· Link utilization
· CPU time
What is a ledger in regards to accounting?
It is a complete set of accounts for a business entity
What is creative accounting?
"Thinking outside the box" when such practice is not permitted. Creative accounting is actually a good description of the practice, as it tends to create a picture, which is not technically correct from the perspective of the information's intended user.
What are the functions of accounting?
Accounting involves the creation of financial records of business transactions, flow of finance, the process of creating wealth in an organization, and summarizing the financial position of a business at a given moment in time.
What is accounting transaction?
A transaction is an execution of a user program and is seen by the DBMS as a series or list of actions. The actions that can be executed by a transaction include the reading and writing of database.
What are the different branches of accounting ?
Financial accounting refers to accounting for revenues, expenses, assets, and liabilities. It involves the basic accounting processes of recording, classifying, and summarizing transactions.
- Cost accounting is the branch of accounting dealing with the recording, classification, allocation, and reporting of current and prospective costs.
- Managerial accounting is the branch of accounting designed to provide information to various management levels in the hospitality operation for enhancing controls.
What are the different fields of accounting?
There is one field of accounting, but there are many different jobs within the field such as auditor, bookkeeper, payroll accountant, cost accountant, tax accountants, etc. Accountants wear many hats and often do different tasks for different clients.
What is an accounting loss?
It is when revenues are less than expenses.
What is Executive Accounting?
Executive Accounting is designed for service type businesses that require a sophisticated accounting system, yet simple to use accounting system. Executive Accounting contains many advanced features such as three styles of invoicing (service, distribution and recurrent), multi-currency capabilities, multiple bank account capabilities and other powerful features. Executive is a single-user system that can be upgraded to an unlimited number of users.
What is accrual accounting?
Accrual Accounting refers to the recording of financial transactions once an economic event has happened and it is not based on the movement of cash.
For example, in Accrual Accounting if you have office rent of $1000 per month, you would record the expense of $1000 each month, regardless if you have actually paid the rent or received an invoice from the property owner.
Most individuals live our daily lives in the cash basis of accounting. We get our paychecks we have revenue, when we pay our car note we have expense.
What is accounting period?
This concept defines the unit of time for which accounting data are collected. It is hard to calculate and measure the profit if the business is trading for long periods. Therefore, accountants estimate profitability in the short segments of time that we call Accounting periods.
What are the nine accounting cycles?
1. Collecting and Analyzing Data from the occurred transaction.
2. Journalize Transaction.
3. The general journal entries are posted to the General Ledger, which is organized by account.
4. Prepare an unadjusted trial balance .At the end of the period, double-entry accounting requires that debits and credits recorded in the general ledger be equal.
5. Prepare adjustments Period-end adjustments are required to bring accounts to their proper balances after considering transactions and/or events not yet recorded.
6. Prepare an adjusted trial balance: As with an unadjusted trial balance, this step tests the equality of debits and credits.
7. Prepare financial statements: Financial statements are prepared using the corrected balances from the adjusted trial balance.
8. Close the accounts: Revenues and expenses are accumulated and reported by period, a monthly, either quarterly, or yearly
9. Prepare a post-closing trial balance: fold: to determine that all revenue and expense accounts have been closed properly and to test the equality of debit and credit balances of all the balance sheet accounts.
What is Control in Accounting?
A control is some type of device or procedure that attempts to limit the possibility of a transaction to be manipulated.
What are different Branches of accounting?
For information, accounting field could be divided into a few branches, which is as follows:-
i) Management Accounting
ii) Financial Accounting
iii) Taxation,
iv) Auditing
Management Accounting is consider a future prediction on the business cost which will be useful for the management (internal users) to make their decision, projection, planning and control their business activity.
The example of the M.A reporting consists of Sales Budget Report, Projection P & L for the year, Monthly Performance Review Report, etc.
The format is not standardized from one business to another and it will be more depending to the need and requirement of the company.
What is partnership accounting?
A business can be a corporation, a partnership, or a sole proprietorship. A corporation is incorporated at the state level. A sole proprietorship is one person in business. A partnership is two or more persons with an agreement on who has which assets and liabilities and income. Partnership accounting is doing the books for the partnership. For IRS purposes, a partnership return must be filed each year.
What is the definition of accounting?
The theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.
What is DD & A in oil and gas accounting?
DD&A stands for Depreciation, depletion & amortization.
What is the Importance of accounting standards?
Financial statements are prepared to summarize all business activities by an enterprise during an accounting period in monetary terms & report financial outcomes in terms of performance, status of assets, liabilities, & flow of cash. These business activities vary from one enterprise to other on one hand and size & volume of business on the other hand. To compare the financial statements of various reporting enterprises poses some difficulties because of the divergence in the methods and principles adopted by these enterprises in preparing their financial statements. In order to make these methods and principles uniform, comparable, transparent, establish accountability, and bring true & fair view of Financial Statement - Accounting Standards are evolved.
Who is considered the father of accounting?
Generally, Luca Pacioli is considered the father of accounting. For more information about him and double entry system he developed, go to the link below at answers.com
Explain Accounting 101?
Typically, it involves the theory of credit and debit, balance sheets, income statements, controlling accounting accounts, subsidiary ledgers, work sheets, depreciation methods, and financial accounting theory.
How is an accounting department structured?
Accounting Departments are usually structured along functional lines: Accounts Payable, Accounts Receivable, Payroll, General Ledger, Sales Transactions, Inventory, etc. A small company may have one person performing more than one (sometimes all) of the functions. In this case, there needs to be financial controls to reduce the probability of theft or embezzlement. In a large company, there could be many people working in one functional area; and in that case, that function might be broken down to smaller components.
What is the meaning of Scrap Value in accounting?
Scrap value is the residual value of an asset. The value of an asset which exists after its estimated life period
What are the differences between accounting and auditing?
Accounting records the events. Auditing is a process that checks to see whether the events occurred and it is properly recorded.
Who created SnapIt accounting?
SnapIt accounting was developed in South Africa by Joe Schoemann Systems.
System Analysis: Joe Schoemann
Programming: Danny Schoemann
What is accounting chart of accounts?
Accounting chart is where you have all the codes for expenses
What is the difference in Accounting and Marketing and what is so different about them?
Accounting has to do with the company finances. Marketing has to do with company public relations, advertising, and product placement. The difference is accounting only deals with financial figures where marketing works on creating those figures.
What is peach tree accounting?
Peachtree Accounting is the name of a computerized accounting software program.
What are accounting rules called?
The accounting rules are called the 'golden rules of accounting'
i.e.
Debit what comes in, and credit what goes out
Debit the receiver and credit the giver
Debit all expenses and loss and credit all incomes and gains.
What is an interlocking accounting system?
The interlocking accounting is a system where the cost and financial accounts are maintained independently of each other, and in the cost account, no attempt is made a separate record of the financial account transaction.
What is accounting for plant assets?
Plant Assets are mainly installations in a factory.
What are the basic assumptions in accounting?
Economic Entity Assumption
Going Concern Assumption
Monetary Unit
Periodicity Assumption
What are Source documents in accounting?
Source documents are those documents in which all kinds of business transactions are recorded. These include invoice, sales order, purchase order, debit note, credit note, goods received note; goods dispatched note, quotation, statement, remittance advice, and receipt.
What is mutual fund sub accounting?
Mutual fund sub accounting is a way to "clear" (the process of buying and selling) the mutual fund transactions. An intermediary record keeps all of the individual shareholder account information, such as the individual balances and individual transactions and dividends in each fund. The account balances roll up to match an omnibus account balance that is record kept by the transfer agent of the fund. When individual investors buy or sell a particular fund those transactions the intermediary combines those transactions and a minimum number of larger trades are placed with the fund in the omnibus account.
What is 'Purchase returns' Accounting.
"Purchase returns" is the entry made in the journal that refers to "Unsatisfactory or defective merchandise/goods which is returned back to the supplier".
What is the difference between accounting and bookkeeping?
Bookkeepers perform a critical function for the firms and organizations they serve. Regularly challenged to maintain precise and accurate records, bookkeepers produce the vital reports that keep management up to date on the financial condition of their company.
Bookkeepers are responsible for maintaining the "business checkbook", much like a personal checkbook. They record routine money transactions like customer payments into a "cash receipts journal" and checks to vendors into a "cash disbursement journal." They also process payroll. At month end they transfer or "post", the "journal" totals to the "general ledger" in preparation for financial statements prepared by the accountant.
Accountants are responsible for the design and management of the financial systems that bookkeepers use. They prepare monthly financial statements and tax returns at year-end. Accountants may also prepare budgets for management and loan proposals for bankers; and perform cost analysis for the company's products or services.
Trust, reliability, and confidentiality head the list of qualities that employers look for when selecting and promoting Certified Bookkeepers. Strong organization and communication skills are also important. Not only are bookkeepers challenged to record routine money transactions, to reconcile accounts and to locate misguided transitions, they also must be able to paint a picture--both verbally and on paper--of all the activities within their assigned area of responsibility.
What are the disadvantages of manual accounting?
1) Manual records are very difficult to be maintained safe
2) Manual records are subject to greater human error
3) Business can see itself in fines and penalties if records are lost
4) Manual records are easier to be falsified, modified, altered, or vanished, as compared
to computerized records, which become very safe when using passwords, firewalls,
and back-ups.
How many accounting standards are currently published?
There are total of 9 accounting standards.
What is the basic accounting equation?
Assets = Liabilities + Owners Equity
What are the elements of the accounting equation?
The elements of accounting are Assets, Liabilities, and Owner Equities.
The way to remember this would be through the acronym ALOE
The accounting equation is Assets = Liabilities + Owners' Equities
In which ways is math used in accounting
Primarily only addition, subtraction, multiplication, and division are used in accounting as follows:
Addition: Summing accounts for inclusion in financial statements (i.e. many different cash accounts are summed to equal "cash" in balance sheet), adding items in inventory to determine accurate counts, adding all outstanding checks (written but not cashed) to reconcile a bank statement, etc.
Subtraction: Determine net income and various margins by subtracting expenses from revenues, calculating variances between actual and budgets.
Multiplication: Tax rates by gross pay to calculated and remit correct taxes, extrapolating period results (i.e. 6 months sales x 2) to estimate annualized results, calculating present value of cash flows using given factors, calculate sales tax on sales, etc.
Division: Calculate various ratios such as asset turnover, operating margins, etc.
Addition and subtraction is used most often and today is nearly 100% automated with computerized applications. Multiplication and Division is used "primarily" for analysis of financial results (with some exceptions noted above).
What are the limitations of accounting ratios?
Ratios place significant emphasis on short-term results. Ratios such as EPS and the ROCE are subject to accounting conventions that might deter businesses pursuing policies that are in their long-term interest.
What qualification do you need to become an accounting professional?
As an accounting professional in the state of Maryland, the requirements are 150 credit hours in order to sit for the CPA examination. The exam is given in 4 parts and all 4 parts can be taken separately. Once you have passed all 4 for parts of the exam, you will be qualified as a Certified Public Accountant.
Although the CPA exam is required for all states, the credit qualification may differ for your state. The department of labor and licensing for your particular state will have more information on the items needed in order to sit for the CPA exam.
As an accounting professional in the state of Maryland, the requirements are 150 credit hours in order to sit for the CPA examination. The exam is given in 4 parts and all 4 parts can be taken separately. Once you have passed all 4 for parts of the exam, you will be qualified as a Certified Public Accountant.
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