Question

1. Both financial and managerial accounting are important to a company's success. Which do you think contributes more to this success and why?

2. financial accounting a subset of managerial accounting or is managerial a subset of financial?

Answer 1

1.

Accounting:

Accounting, serves to provide essential information so business professionals can make good economic decisions. In a business, two types of accounting reports are prepared--management and financial--and both are essential in their own way.

Financial Accounting:

Financial accounting reports are prepared by accountants and sent directly to entities outside of the company, such as stockholders, tax professionals and lenders. These reports show concrete numbers, as well as past mistakes and achievements. These documents are objective, factual and avoid projections.

financial accounting reports are for objective outside sources, they must abide by the generally accepted accounting principles (GAAP)

This type of accounting often benefits the future of a company. Investors and tax professionals need hard facts based on numbers that already exist, so they can properly assess a company performance.

Managerial Accounting:

Management, or managerial, accounting is used to run companies and help managers make important financial decisions. Accountants prepare these documents and send them directly to personnel within a company, such as managers and executives. These reports break down numbers and projections related to departments, products, employees and customers and how they affect the company

Management accounting reports provide estimates for what might happen in the future. A manager needs projections and would rather use estimates on what will happen than reports on what has already happened because of the ever-changing financial terrain in business

Significance in Success:

Although both financial and managerial accounting are important to a company's success, I believe that managerial accounting is more important than financial accounting. Managerial accounting lets the managers and executives know what is going on within the business. It helps draw up reports which lead to operational efficiencies. If a company is not successful, then its financial accounting reports won't mean anything, because eventually there's nothing to report.

2.

Both financial and managerial accounting are prepared in different ways because their needs are different. where Financial accounting is prepared by set rules given generally accepted accounting principles (GAAP) but managerial accounting is prepared in informal way as it is used internally in the bussiness itself. so, therefore both financial and managerial accounting are not subset of each other but cost accounting is subset of both financial and managerial accounting