Posted by: | 20th Oct, 2010

Common Sense in Action

While it may be difficult to find an article on the difference between managerial accounting and financial accounting (since that belongs in a textbook rather than a newspaper) I did manage to very quickly find an article that gives a good example of managerial accounting in action.

Take a look at it here:

To summarize, this is the story of a web design company that made the switch to a software-selling company. Once selling software became more profitable than doing web design for clients, management made the decision to focus on that area.

This is a prime example of managerial accounting, where we make the best decisions with what we have. This company had the accounting data that showed that software was making more money and that this area was growing. Based on this, they made the decision to focus on software only. This may seem like a very basic example that is just common sense, but as Mr. Kroeker told us, that’s what managerial accounting is all about.

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