Managerial stakeholders as opposed to external stakeholders.
Managerialaccounting, also known as management accounting, includes many topics found incost accounting. Management accounting involves preparing and providing timelyfinancial and statistical information to business managers so that they canmake day-to-day and short-term managerial decisions. It is important tomaintain solid, professional accounting practices for the growth of a business.
Management accounting is different than financial accounting because managerialaccounting is used for internal stakeholders as opposed to externalstakeholders. The information provided in management accounting is given to themanagers of a company so they can make financial decisions for the company. Accounting for agriculture, farming,and rural business is an area that requires expertise and an understanding ofthe industry.
People in an Ag Business career path will need to be able toreport and give advice for a company or farms financial well being. Theyconduct strenuous record keeping and oversee management accounts, companybudgeting, and the administration of accounting tasks. There is an agriculturalaccounting program for people interested in agricultural accounting. Studentsin this concentration discover how to apply accounting principles inproduction, processing, or retailing sectors of the agriculture and foodindustry. “Farming is unique. There are fewother types of business that rely on living produce, whether it’s crops orlivestock. That makes farm accounting more complex than other businesses whenit comes to assets, liabilities, costs and revenue” (Xero, 2017).
Properlymanaged agricultural land shouldn’t depreciate; possibly even go up in value.The cost of maintaining your land should always be accounted for. Farming is acritical field. If a country didn’t have the resources to feed itself, it wouldhave to rely on imports. Even if farmers hire an accountant,it is important that the accountant and the farmer work together to access thefigures to help your account run more efficiently. Records are an aid tomanagerial control. With the help of records, a farmer can keep a close checkon whether work on his farm is going according to his plans. This can tell himif he is using too much feed or seeds.
It can also detect whether livestock yieldsare falling or rising. There are many good reasons forkeeping farm accounts. It permits the farmer to find out the size of theincome, which is derived from the farm. Money can be saved for investments toimprove the farm. Farm accounts also help you know the total value of the farmbusiness and to know who owns each part of the land. Keeping farm accounts isthe only way to reveal the weak spots in the farm’s business and show where andhow to improve management to have a larger income. (Gietema, 2006) In management accounts, opening andclosing values of livestock and crops in store are usually based on marketvalue rather than cost of production. The output from each harvest is recordedseparately in management accounts.
“Management accounts for a farm include;enterprise, crop enterprise output, adjustment for disposal of the previousyear’s crops, opening and closing valuation, rearing livestock enterpriseoutput, breeding livestock enterprise output, breeding livestock enterpriseoutput, breeding livestock stock appreciation, herd depreciation, output fromhome grown fodder crops grown for sale, output from tillage and forage, outputfrom non-agricultural diversification enterprises, separable diversifiedactivities, miscellaneous revenue, single payment, and total farm output” (Departmentfor the Environment, Food and Rural Affairs, 2010, p. 11-13). It is important for managers in thefarming industry to know what is happening in their business because farmersare the backbone of this nation. They provide food for everyone in the world.It is essential that farming industries are aware of their managerial accountsso they can get the correct amount of seed, feed, and other necessities for thefarm without spending more than necessary.
Accounting on a farm is alsonecessary to provide management with an idea of how much to pay farmers andtruckers who are working for their company. To obtain higher income, farmersmust have exact knowledge about present and potential gross income andoperating costs. The best way to obtain information on present results is tokeep records and accounts. Diagnosis of management problems is the prorequisite of sound planning. Records and accounts provide the basic informationneeded for a diagnosis. It helps to acquire business habits, which can help intaking advantage of changes in the economic environment.
The farmer gets abetter insight into the working of his business, which helps in finding out thedefects which can be set right by exercising better control and effectingeconomies. Farmers can avoid mistakes and losses, which would otherwise resultto dependence only on his memory for guidance. Properly kept records andaccounts are authentic records with the help of which the lending agencies cansanction the loans easily. Research requires precise and correct data, which ispossible only if proper records and accounts are maintained on the farms. Thefarmers need to continuously feed the facts for state and national farmpolicies such as land policies, price policies, and crop insurance. (Economicsof Natural Resources & Farm Management, 2015) Overall, management accounting ensuresthat all managers within a company know how money is being spent and theoverall financial aspects of the company.
It is different than financialaccounting because financial accounts are used for entities outside of theorganization. Management accounting is important for people in farming becauseit allows farm owners and managers of the farm to know how much of a profitthey are going to have as well as how much seed, grain, feed, and etc. they aregoing to need. Management accounting allows the needed financial information tobe available whenever needed. People in Ag Business will need tobe able to know how to read managerial accounts and provide that information toanyone within the business. Farming is unique in the fact that there are veryfew jobs that provide food and resources to everyone in the world.
It isimportant to keep records of all accounts that happen within a farming industryto ensure that all products are being recorded and accurate information isbeing provided to internal users. Keeping farm accounts is the only way toreveal weak spots in a farm’s growth. In management accounts, opening andclosing values of livestock and crops in store are usually based on marketvalue rather than cost of production. To obtain higher income, farmers musthave exact knowledge about present and potential gross income and operatingcosts.
By keeping management accounts, the farmer gets a better insight intothe working of his business, which helps in finding out the defects which canbe set right by exercising better control and effecting economies. Thesemanagement accounts allow businesses the opportunity for growth that they wouldnot have if they just used financial accounts.