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Strictly speaking, this is book keeping, which is the on-ramp to accounting proper. The bulk of accounting, as I understand it, is not the relatively simple up
by jacques_chester 11y ago
Strictly speaking, this is book keeping, which is the on-ramp to accounting proper.
The bulk of accounting, as I understand it, is not the relatively simple updating two accounts in a single transaction on a ledger.
It's deciding which accounts. Which ledger. And making a case for why.
Because the flipside of accounting is management accounting: those famous reports (income report, cashflow report, balance sheet) which markets and governments take such a close and legally meaningful interest in.
- Chirael 11y agoBookkeeping is tactical and low-level while accounting is strategic and higher-level. A lot of the strategic possibilities come about because of the many ambiguities and options in tax areas, and because the "best" decision for a given question has to do with so many variables.
- dontscale 11y agoThis is all correct except that financial accounting deals with external reporting and managerial accounting deals with internal reporting. But the distinction between bookkeeping and accounting is spot on IMO.
- jacques_chester 11y agoThanks. In my understanding, managerial 101 more or less starts where financial 101 leaves off. Does that sound right?
- Naga 11y agoPretty much, yeah. Managerial 101 builds on introductory financial reporting. The biggest difference between them are the intended users. While financial accounting is all about accurately stating your financial position for tax authorities, capital markets, banks, and other potential users, managerial accounting is internal. It's for managers and decision makers to give them the most accurate information possible. Because of this, there is no consistent standard used in managerial accounting like there is in financial accounting (GAAP or IFRS), but its largely similar I believe between different companies.