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COMM 104 (26)

Financial Accounting

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COMM 104
Gordon Dueck

There are two broad types of accounting information: • Financial Accounts: geared toward external users of accounting information • Management Accounts: aimed more at internal users of accounting information Although there is a difference in the type of information presented in financial and management accounts, the underlying objective is the same - to satisfy the information needs of the user. Financial Accounts Management Accounts Financial accounts describe the Management accounts are used to help performance of a business over a specific management record, plan and control the period and the state of affairs at the end of activities of a business and to assist in the that period. The specific period is often decision-making process. They can be prepared referred to as the "Trading Period" and is for any period (for example, many retailers usually one year long. The period-end date prepare daily management information on sales, as the "Balance Sheet Date" margins and stock levels). Companies that are incorporated under the There is no legal requirement to prepare Companies Act 1989 are required by law to management accounts, although few (if any) prepare and publish financial accounts. The well-run businesses can survive without them. level of detail required in these accounts reflects the size of the business with smaller companies being required to prepare only brief accounts. The format of published financial accounts There is no pre-determined format for is determined by several different management accounts. They can be as detailed regulatory elements: or brief as management wish. · Company
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