Strategic Management Accounting 101
If you wish to be able to learn what the differences of strategic management accounting and financial accounting are then you have picked the right article to read. For you to be able to know what accounting is the first step that you need to take before you can proceed.
How can you explain what accounting is? A definition of accounting goes like this: this is a system of reporting, collection, analyzing and summarizing information and financial terms of a business organization. One of the many things that you need to know about the business accounting is that it is composed of the strategic management accounting and financial accounting. There are in fact similarities and differences with the strategic management accounting and financial accounting.
But the fact cannot be denied that there are more differences with the strategic management accounting and financial accounting.
Finding Ways To Keep Up With Businesses
The format or the structure of the presentation of information is the first difference between the strategic management accounting and financial accounting. You will be able to notice that on a uniform basis the information of the business will be presented with the use of financial accounting. The reason why you will be able to see this kind of presentation is because financial accounting makes use of the unified structure of presentation. The financial accounting also has three basic financial statements which are the following: statement of changes in financial position, balance sheet and income statement or profit and loss account.
The use of the balance sheet is to be able to show the financial position of the organization whenever it is requested. The financial statements on the other hand are for people that are outside of the organization. The general public, shareholders, government and creditors are in fact a few examples of people that are outside of the organization.
The in house management is as a matter of fact the main focus of the strategic management accounting. The structure of the accounting statements will therefore depend on the business since it is being used within. The structure will also depend on other factors such as requirements of individual use and circumstances. What is great about the strategic management accounting is that so that you may be able to meet the needs of the organization you may have it customized.
Another basic fact of the strategic management accounting that you need to know is that this is for the exclusive use of the organization’s management. This means that there are no outsiders that can see the strategic management accounting. This also means that the structure of the strategic management accounting will be in accordance to what the in house management wants.
The statutory requirement of the preparation of the accounts is as a matter of fact another difference of the strategic management accounting. In order for an investor to decide if he should invest in the business or not there are times that he will ask to see this.