1. What is managerial accounting? How does it differ from other areas of accounting? Explain the usefulness of management accounting for the profession. Unlike other areas of accounting, managerial accounting is internally oriented and provides information to a company's managers. Management accounting provides managers with the relevant information and figures needed for planning, control and decision making within organizations. Financial accounting is externally facing and provides financial information and reporting to external parties, including shareholders, creditors, and regulators. Due to the different users of financial and managerial accounting, financial accounting is primarily concerned with the financial performance of “past activities, objectivity and verifiability, accuracy and enterprise-level performance”, unlike managerial accounting which is concerned with decisions affecting the “future, relevance, timeliness and performance of the segment” (TEXTBOOK, page 3). While financial accounting is mandatory for external reporting and is subject to rules, including GAAP and IFRS, managerial accounting is voluntary and outside the control of externally imposed rules. Managerial accounting is very useful for managers in planning, controlling and decision-making activities. Planning is all about creating goals and identifying how to achieve them. Management accounting information plays a critical role in planning, as a company's future is greatly influenced by activity estimates and budgets made up of expected revenues and costs. Monitoring activities include obtaining feedback on the company's operations to ensure that the company's plan is on track or is being modified as needed. For example, this includes managers comparing actual costs… middle of the paper… as they only assign costs to products that require activity to produce. Activity-based costing provides management with information that is easy to understand and analyze, with the potential for benchmarking and more detailed overhead costs. It's important to note that these benefits don't come at a low price, which may prove difficult for smaller companies with limited funds. If I were in the position to choose a costing method for my small plastic recycling business, I would choose the traditional costing method. My business is still small and unfortunately I don't currently have the luxury of implementing a complex costing system, such as activity-based costing. However, I can see the benefit of using activity-based costing as a supplement to my current traditional calculation method as my company grows and my product line expands.