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Essay / Research Paper Abstract
This 5 page paper explains the differences between management accounting and financial accounting. Each type of accounting is considered in turn, considering who the users of the accounts are, how they want to use them, and how this is reflected in their preparation and presentation. The bibliography cites 3 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEfinacc.rtf
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Unformatted sample text from the term paper:
operations of the business. However, it can be argued that there is a different dominant need for each group of stakeholders. The main difference may be seen between the managers
of a business, that need an accurate breakdown of operational costs, progress and cash flow, whereas shareholders may want a broader picture with performance in terms of returns created over
a longer period of time. The different needs reflect the way in which the accounts are used and indicate the need for figures to be presented in a manner conducive
to their users goals. The two types of accounts that are seen are financial and management accounting, each of these serves a valuable but different purpose. If we
look at each type of accounts we can consider how and why they are different. Financial accounting can be typified by the
annual accounts and the way in which they are used to compare year with year and also in terms of benchmarking between companies for performance. Therefore, we can see that
the majority of people using these accounts are not directly involved with the day to day running of the company and as such can understand that the figures are all
historical, and may be out of date by the time they are read. When looking at this type of accounts it is important
to remember that the shareholder is deemed to be the defined user. This has implications on the way in which the accounts are prepared and it may be argued that
if this defined user was another stakeholder group there would be a different perspective placed on the annual accounts and the results would be presented in a very different manner.
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