part I –Managerial accounting basics Manufacturing part I –Managerial accounting basics

Comparison of managerial and financial Managerial accounting Financial accounting Accounting to Insiders-different levels of management and other employees Proforma data Narrowly focused Single purpose custom statements for one product, one department, one day, etc. No GAAP Statements prepared as needed--Hourly, weekly Accounting to Outsiders-investors, government, creditors, etc. Historical data impacting accounting equation Broadly focused Multi-purpose statements – income statement, balance sheet, cash flow GAAP Statements prepared on a regular basis-Annual, quarterly Comparison of managerial and financial

Matching principle & manufacturing Basic rule -- Record expenses in the same time period as the revenues that they help to generate Timing is everything! Manufacturing costs are expensed when the manufactured product is sold-cost of goods sold expense Expensing manufacturing costs, then is delayed until the product is sold Manufacturing costs initially start in an asset account, such as a particular type of inventory Matching principle & manufacturing

Expense or not to expense! Period costs Product costs Selling costs-marketing the product and finding customers Office & administrative costs-support functions of the business Expensed as incurred Benefit received when service performed or asset used up Direct and indirect factory costs Direct (raw) materials-becomes the product Direct labor-cost of hands-on workers Factory overhead-all other factory costs-indirect Key words to look for – factory, production, manufacturing, product, direct or raw materials, direct labor Expensed only as product is sold Expense or not to expense!