Wednesday, 9 October 2013
management versus financial accounting
Financial Accounting vs Management Accounting Management accounting is a field of accounting that analyzes and provides cost information to the internal management for the purposes of planning, controlling and decision making. Management accounting refers to accounting information developed for managers within an organization. CIMA (Chartered Institute of Management Accountants) defines Management accounting as “Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that used by management to plan, evaluate, and control within an entity and to assure appropriate use of an accountability for its resources”. This is the phase of accounting concerned with providing information to managers for use in planning and controlling operations and in decision making. Managerial accounting is concerned with providing information to managers i.e. people inside an organization who direct and control its operations. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Managerial accounting provides the essential data with which organizations are actually run. Financial accounting provides the scorecard by which a company’s past performance is judged. Because it is manager oriented, any study of managerial accounting must be preceded by some understanding of what managers do, the information managers need, and the general business environment. Comparison chart Financial Accounting Management Accounting Format: Financial accounts are supposed to be in accordance with a specific format by IAS so that financial accounts of different organizations can be easily compared. No specific format is designed for management accounting systems. Planning and control: Financial accounting helps in making investment decision, in credit rating. Management Accounting helps management to record, plan and control activities to aid decision-making process. External Vs. Internal: A financial accounting system produces information that is used by parties external to the organization, such as shareholders, bank and creditors. A management accounting system produces information that is used within an organization, by managers and employees. Focus: Financial accounting focuses on history. Management accounting focuses on future & Present. Users: Financial accounting reports are primarily used by external users, such as shareholders, bank and creditors. Management accounting reports are exclusively used by internal users viz. managers and employees. Reporting frequency and duration: Well-defined - annually, semi-annually, quarterly As needed - daily, weekly, monthly. Optional?: Preparing financial accounting reports are mandatory especially for limited companies. There are no legal requirements to prepare reports on management accounting.Ads not by this site Objectives: The main objectives of financial accounting are :i) to disclose the end results of the business, and ii) to depict the financial condition of the business on a particular date. The main objectives of Management Accounting are to help management by providing information that used by management to plan, evaluate, and control. Legal/rules: Drafted according to GAAP - General Accepted Accounting Procedure. Drafted according to management suitability. Accounting process: Follows a full process of recording, classifying, and summmarising for the purpose of analysis and interpretation of the finnancial information. Cost accounts are not preserved under Management Accounting. The necessary data from financial statements and cost ledgers are analyzed. Segment reporting: Pertains to the entire organization or materially significant business units. May pertain to smaller business units or individual departments, in addition to the entire organization. Nature of information: Focus on quantitative information Focus on both qualitative and quantitative information jj COURSE; DIPLOMA IN BUSINES MANAGEMENT BDO1/0025/2010 HARRISON ONYANDO UNIT; ENTERPRENEURSHIP DBM015 SUBJECT; BUSINES PLAN TABLE CONTENT 1. BUSINESS IDEA 2. MARKETING PLAN 3. ORGANIZATION PLAN 4. PRODUTION AND OPERATION PLAN 5. FINANCIAL PLAN 6. EXECUTIVE SUMMARRY 7. APPENDICES 8. BUSINESS IDEA Name of the business Rafiki bakery limited company P.o box 001-20500 Narok Telephone no. 0789133059 Business products The business products are wheat flour, vegetable fats, bread improver, soya, preservative, calcium propionate, sugar, salt and acetic acid which will be obtained from Narok town, due to the facts that the wheat production is in larger scale in Narok County Business ownership The business is owned by the investors and shareholders whom elect board of director to managed the business on their behalf Mission of the venture To enhance mental development among the youth and the society as whole To have ability to reach ones full potential and utilizes the specialized business knowledge, skills they had gain and to pursue the owners ideas through this business To be independent, owned boss and flexibility To pursue financial reward and potentials In order to reduced bureaucracy in as other business To be self employed and create job opportunists for the youth and society as whole Objectives of the venture The primary objectives of the business is to produced and sells goods for profits of course through the satisfaction of customers wants and needs To creates customers for its products and services. The more the customers are created the wide will the market for the goods and larger the profits generation To stay in the market i.e. must offer stagnation by using efficient method of production through the use of technological advancements To have healthy climent for both employees and publics as whole To avoidances of anti-social practices i.e. hoarding, black market, smuggling and over pricing to earn more profits To supply of standard qualities and quanties of products through clearances by the Kenya bureaus of standard [KEBS] Location of the venture The premise of the company is situated along the Nairobi, Narok to Bomet highway road. Two kilometer from Narok town and one kilometer from the main road.Narok county is the highest production of wheat cereals products which will be our main sources of raw materials We obtained clearance from government bodies such as environmental management authority, ministry of health, land and local government through county council of Narok. Business requirement The requirement for the company operations are wheat cereals,labour,power sources, water supplies,fuels,machines,equipments,moto vehicles,land,buildings,linces and permits for the operation of the company; Wheat cereals; is the main sources of raw materials which is abundant in Narok county Power sources; the location of the company is closer to the power line hence connection is cheaper and fuel from Narok town Water supplies; for cooling of the machines when heated up, mixtures of the raw materials and others usages in the company Machines and equipments are very vital in the operation of the business Motor vehicles; for transportation systems into and out the premises. Labour; availability of skilled and unskilled labor because it is closer to the Narok university college and Narok town which has larger population whom are unemployed. Personnel requirements. The board of director. 1. The managing director. 2. Administration in the director office. 3. Secretary in the director office. 4. Clerk in the director office. Finance department. 1. Finance manager. 2. Chief accouter. 3. Clerk accouters. 4. Accounting staff e.g. subordinates. Production department. 1. Production manager and operation manager. 2. Materials manager. 3. Supervisor officer. 4. Machines operators. 5. Production staff. Sales and marketing department. 1. Sales and marketing manager. 2. Public relation manager. 3. Supervisors’ officers. 4. Field staff. 5. Sales and marketing staffs. Personnel’s department. 1. Personnel manager. 2. Employee’s relation officers. 3. Supervisors. 4. Record officers. 5. Personnel staff. Purchasing departments. 1. Purchasing manager. 2. Procurement. 3. Supervisors. 4. Purchasing staffs. Overalls requirements for employees in this company are;. Have computer knowledge’s, skills and experiences. The managements departments must have management roles e.g. interpersonal roles, information roles and decision roles. The management departments must possess management skills e.g. technical skills, interpersonal, conceptual skills and diagnostic skill. Any personnel within the company premises must pose the right qualification for the job he and she is seeking to perform. Any employee within the company premise must have a high moral character, integrity and impartiality in performing any functions, duties and responsibilities. Any employees must have high values of ethic in the company i.e. refuse to participates in dishonest schemes, content updating the employer on how business is doing Environmental and industry analysis. Although the production of these products are very completive the strategies situation of the company is very advantages to its competitors in term of; Consumers; the consumption of these products is very higher and we intend to produced higher quality products. Demographic factors; the region in which we intend to market the products has higher population and some are employed in different sectors within the Narok county and other places thus high demand for the products. Cultural factore;the products are for general consumption i.e. no religion and ethnic are against the products. No government restriction on the products and the formulation of the company. Supplies; the availability of wheat cereals as the main sources of raw materials within Narok County. The products are very friendly to the environment.