Managerial accounting vs financial accounting essay

Foundational Coursework
Standard Coursework (72 credits) – Accounting for Business Combinations, Audit and Other Assurance Services, Creating and Sustaining Customer Markets, Contemporary Issues in Accounting Theory, Corporate Governance, Corporate and Governmental/Nonprofit Financial Reporting and Decision-Making, Corporate Financial Reporting 1, Corporate Financial Reporting 2, Entrepreneurship: Services and Retail Business Creation, Global Competition and Market Dominance, Information Systems and Technology, Information Analysis, Legal and Ethical Aspects of Business, Managing People and Organizations, Management of Service and Manufacturing Operations, Managing the Global Enterprise, Strategic Decision-Making in a Changing Environment, Strategic Cost Management, Taxation of Individual and Business Entities, and Value Creation through Financial Decision-Making.

The allocation of a property’s purchase price between land and building is different from one type of property to another. In the absence of specific valuations, a general rule of thumb for real property is 80% to buildings and 20% to land. However, every commercial property is likely to be unique. A good method of determining the split between land and buildings is to review public records, especially county property tax assessment records. Although the assessed value is not necessarily the same as the purchase price of the property, the assessment’s allocation of value between land and structures can be applied on a pro rata basis to the purchase price. For example, if a property’s total appraised value on the county assessment records is $750,000, and is split $150,000 to land and $600,000 to building, the cost split should be 20/80. If that same property is purchased by a business for $900,000, the purchase price would be allocated as $180,000 to land (20%) and $720,000 to buildings (80%).

Managerial accounting deals with determining the actual costs of products or services. Managerial accountants calculate and allocate overhead charges to property assess the true expenses related to the production of a product. The overhead expenses may be allocated based on quantity of goods produced or other drivers related to the production, such as square foot of the facility. In conjunction with overhead costs, managerial accountants use direct costs to properly assess the cost of goods sold and inventory that may be in different stages of production.

Knowing the difference between financial accounting vs. managerial accounting will benefit you greatly as a facility manager.  I know too many department heads that are focused solely on accomplishing objectives with their team.  While that is great and can’t be understated, you have to understand the financial health of your organization through financial accounting in order to get a complete picture of its strategic direction.  In addition, you need to be able to use managerial accounting to make informed decisions on daily operations and report to your management how and why you make those decisions.

Managerial accounting vs financial accounting essay

managerial accounting vs financial accounting essay

Knowing the difference between financial accounting vs. managerial accounting will benefit you greatly as a facility manager.  I know too many department heads that are focused solely on accomplishing objectives with their team.  While that is great and can’t be understated, you have to understand the financial health of your organization through financial accounting in order to get a complete picture of its strategic direction.  In addition, you need to be able to use managerial accounting to make informed decisions on daily operations and report to your management how and why you make those decisions.

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