COMMERCE 2MA3 Chapter 1: COMMERCE 2AB3 Textbook Notes Chapter 1

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2MA3
• Professor: Ali Abdul Hussein

Document Summary

Largest difference between financial accounting and managerial accounting: who uses it: financial accounting: external users (shareholders, creditors, managerial accounting: internal users (managers, officers of a company to evaluate effectiveness of decisions and make decisions) The reason why financial and managerial was created because different people have needs for different information. External (shareholders, creditors, regulators), can be for legal reasons they need it. Internal reports, made as often as needed (big decisions etc. ) Is related to the business in the big picture. Can only use double entry accounting (involves two accounts or more like a increase in cash will increase loans. Is related to the subunits of the business. (smaller picture) There is no predetermined standard except it is based on the decisions that you need to make. Can go beyond double entry accounting to include and examine other relevant data. No independent audits (aka no one from outside has to be contracted to audit managerial reports)