5. Financial accounting emphasizes precision, while managerial accounting emphasizes relationships and non monetary factors.
6. Managerial accounting emphasizes the segments of an organization, while financial accounting tends to look at an organization as a whole.
7. Managerial accounting draws heavily on other disciplines, while financial accounting relies primarily on its own base.
8. Managerial accounting is not mandatory, whereas for most organizations, financial accounting is mandatory. The purpose of traditional managerial accounting is to take financial accounting data, blend it with non accounting data, and develop a new set of information and relationships concerning the financial functioning of an organization, which will enhance the effectiveness and the efficiency of the managerial decision
making process in the organization.4 Although not mandatory, most firms perform the management accounting functions.
Classification of Operating Costs in
In this consideration of operating costs, classification according to four concepts are discussed. These cost classification concepts are (1) natural classifications, (2) object of expenditure classifications, (3) product related classifications, and (4) activity related classifications.
Natural cost classifications follow the characterizations of the types of goods and services consumed in a production operation. In ocean shipping companies, the product is a service the transportation of goods over the oceans.5 For ocean shipping companies, primary operating costs may be classified according to a natural system that identifies the major input components required to operate a vessel fleet. These major classifications include (1) propulsion, or fuel, (2) labor, (3) repair and maintenance, and (4) all other operational costs. Within each of these major natural cost classifications there may be a number of sub classifications. ...