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Definition of Managerial Accounting

1. __________________________________________: The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources. (1981)

2. Comparison of Managerial and Financial Accounting See Exhibit 1-2

1. __________________________________________ (or Internal vs. external focus)

a. Financial accounting communicates information about the financial health of a company to external users (creditors and investors)

(1) Information benefits those who have no access to financial or operating information about a company.

3. __________________________________________

a. Financial accounting -- public companies traded on stock exchanges governed by the SEC prepare financial statements based on __________________________________________

(1) Even nonpublic companies use GAAP

(2) GAAP is the rules that govern how to account for transactions.

(3) GAAP provides a level of assurance that reports will follow certain standards.