6 Part 1 Overview

reproduced on the financial statements, however. Correspondingly, not all financial

accounting information is useful to managers in performing their daily functions.
Cost accounting creates an overlap between financial accounting and man-
agement accounting. Cost accounting integrates with financial accounting by pro-
viding product costing information for financial statements and with management
accounting by providing some of the quantitative, cost-based information managers
need to perform their tasks. Exhibit 12 depicts the relationship of cost account-
ing to the larger systems of financial and management accounting. None of the
three areas should be viewed as a separate and exclusive type of accounting.
The boundaries of each are not clearly and definitively drawn and, because of
EXHIBIT 12 changing technology and information needs, are becoming increasingly blurred.

Accounting Information System

Components and Relationships

External parties,
including shareholders

1 2 3 4

Internal accountants
4

gather data for 9

10

11

12

13

14

15

16

17

18

19

20

Flows into 21

22

23

24
For use by
25

26

27

28

29
Internal accountants
Cost 30

31

32

33

provides information
for inventory and
cost of goods sold or
Financial Accounting
cost of services
rendered for the provides information for
financial statements periodic financial
statements
Management

Management

Accounting
provides information
AIS output to be
combined with
other external
for internal management
Monetary Nonmonetary Analysis information by
information information managers to use in

Planning Controlling Decision Evaluating

making performance