Applied Managerial Accounting
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The Eddison Electronics Company (EEC) owns a wide variety of manufacturing companies that make sophisticated electronic controls. You are EEC’s corporate business financial analyst. Your responsibilities include the following:
Creating and analyzing the monthly performance of each company within EEC.Providing and analyzing costing information for each company within EEC.Analyzing the major capital projects submitted by each company. 1,500–1,750 words (not including title page and references)
You have recently hired a new assistant, Susan Thompson, who previously worked in a financial accounting office preparing journal entries, which provide you with a recording of the day-to-day activities of the company and financial statements (income statement, statement of owners’ equity balance sheet, and cash flow statement). Although your new assistant has experience with and fully understands financial accounting, she has no experience with managerial accounting.
In a memo to your new assistant, Susan Thompson, explain to her the similarities and differences between financial and managerial accounting. Provide examples of managerial accounting reports that she could expect to see within EEC, and explain how management might use the information to make decisions. Keep in mind that the income statement, statement of owners’ equity balance sheet, and cash flow statement, although generated in financial accounting, are used to develop all of your managerial accounting reports. Examples of a few of those reports are the horizontal analyzes, vertical analyzes, and ratios.