Accounting: Financial & Managerial

Financial Accounting

Here are few factors defining financial accounting as well as the definition listed below. Financial accounting only deals with financial data and nothing else. It is regulated by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). Financial accounting is time consuming, the information may be delayed for a short period of time. The information in financial accounting provides precise data for external audiences to review. Financial accounting report covers the whole organization and not just one department. The definition for financial accounting is: "A major branch of accounting involving the collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements." (Glossary, 2004)

Managerial Accounting

"Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to assist management making decisions and managerial control functions" (Management accounting, 2005). Management accounting collects financial and operational information from the local departments. Management makes all the guidelines unlike financial accounting where the FASB and IASB regulate the guidelines. The information collected is also accurate but not precise. Management accounting will "inform internal decisions made by employees and managers; feedback and control on operating performance".

Current Variable Costs

Lava Rock Bicycles has provided me with a list of variable costs that include: Component parts and packaging, production labor, and sales commissions. Most of you may already know what variable costs are but I would like to clarify for those of you who don't.