Managerial accounting vs financial accounting essay

Businesses have two primary objectives:

  • Earn a profit
  • Remain solvent
Solvency represents the ability of the business to pay its bills and service its debt. The four financial statements are reports that allow interested parties to evaluate the profitability and solvency of a business. These reports include the following financial statements:
  • Balance Sheet
  • Income Statement
  • Statement of Owner's Equity
  • Statement of Cash Flows
These four financial statements are the final product of the accountant's analysis of the transactions of a business. A large amount of effort goes into the preparation of the financial statements. The process begins with bookkeeping, which is just one step in the accounting process. Bookkeeping is the actual recording of the company's transactions, without any analysis of the information. Accountants evaluate and analyze the information, making sense out of the numbers.

Add together your total direct materials costs, your total direct labor costs and your total manufacturing overhead costs that you incurred during the period to determine your total product costs. Divide your result by the number of products you manufactured during the period to determine your product cost per unit. Using the numbers from the previous examples, add together $15,000, $3,200 and $5,000 to get $23,200 in total product costs. Assume you manufactured 200 bicycles during the same period. Divide $23,200 by $200 to get a product cost per unit of $116.

Managerial accounting vs financial accounting essay

managerial accounting vs financial accounting essay

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managerial accounting vs financial accounting essaymanagerial accounting vs financial accounting essaymanagerial accounting vs financial accounting essaymanagerial accounting vs financial accounting essay