FINANCIAL ACCOUNTING: produces three key financial reports (the bal ance sheet, income statement, and cash flow statement). These three reports ensure that external stakeholders can access the information they need. External stakeholders might include investors and bankers; stock brokers and financial analysts who offer investment assistance; suppliers; labor unions; customers; local, state, and federal governments; and governments of foreign countries in which the company does business. Always historical
MANAGERIAL ACCOUNTING: provides vital information about a company to internal users. Because it is for internal use, it does not have to conform to the restrictions of outside regulation and can be expressed in whatever way is most useful for managers. Information can be reported in dollars, units, hours worked, products manufactured, numbers of defective products, or the quantity of contracts signed. The overall purpose of this information is to enable managers to make more informed and effective decisions. Often forward looking
Holding costs - associated with holding or "carrying" inventory over time. Ex: Obsolescence, Insurance, Extra staffing, Interest or financing, Pilferage, Damage, Warehousing.
Ordering costs - associated with costs of placing order and receiving goods. Ex: Supplies, Forms, Order processing, Clerical support.
Setup costs - cost to prepare a machine or process for manufacturing an order. Ex:
Clean-up costs, Re-tooling costs, Adjustment costs