a) Explain the difference between Financial Accounting, Management Accounting and Cost Accounting?

b. What do you know about fixed costs, variable costs and mixed costs?

Answers:

A. Financial Accounting 

- reports in the form of FS is presented to a external stakeholders. 

- must adhere to GAAP

- reports annually, quarterly, or even monthly

- importance on verification and relevance of info

Management Accounting

- reports internally to the company in the form of management's report

- can use estimate based on professional judgement

-  reports as needed

- importance on timing 

Cost Accounting

- a subset of both financial accounting & management accounting

- uses both information (financial & managerial) as an aid in planning & controlling

- focuses on the cost of rendering a service, buying, selling, and producing a product

B. Fixed Cost

- do not vary

- constant

- fixed amount

- ex. rent (12,000 ea. month)

Variable Cost

- varies depending on consumption/ production

- ex. electricity

Mixed Cost

- contains both fixed and variable component

- ex. annual expense of a car

Step-by-step explanation

1. Financial Accounting is a branch of accounting that focuses on the preparation of financial statements. It concerns factors such as verification and relevance. The preparation of each item must adhere to the GAAP as established and the reporting is usually annually, quarterly, and/or monthly. The Management Accounting is concerned with the internal affairs of the management. It is focused on providing timely reports as needed by the management to decide on managerial matters. Unlike in the Financial Accounting, Managerial Accounting do not have to adhere in the GAAP and can freely use estimates in their reports. Cost Accounting is a subset of these two branches. It uses both information from historical to managerial as an aid in planning and controlling costs. 

2. Fixed cost as the name suggest are cost that are constant or that do not vary. An example for this is rent, when you rent a place you pay for the same amount monthly. There are no varying variables that affect it. Unlike in variable cost, it vary depending on your consumption or production. An example for this is electricity. Normally, your electricity will increase if you increase your consumption or use.  This cost is classified as variable cost. Mixed cost is something in between. The example of annual expense of a car can be dissected into fixed and variable costs. The insurance and depreciation are fixed cost while the gas and tires are variable expenses.