Business owners are faced with making countless decisions every business day. Financial and management accounting both provide useful and relevant information to assist business owners to make these decisions.
Financial accounting data is concerned with the historical activities of your business and presents your information in a standard format for users external to your organisation. Financial institutions, government, directors and shareholders all utilise this information to determine how a business has performed. The standard format for presentation of this data is a profit and loss statement, a balance sheet and a cashflow statement. Often this data will be compared to previous years to highlight any improvements or otherwise in current operations.
Management accounting is designed for internal use by managers and owners. It is leveraged more toward the present and future operations of the business. The main objective is to provide information that can be utilised to improve, plan, evaluate and control your business. The information collected and reported on are considered to be key operating parameters for your business and can include:
· rate or volume analysis
· product profitability
· cost analysis
· capital budgeting
· sales metrics
· cash forecasts and usage reports
· actual v budget reports
· variance analysis
· key ratio reporting