External vs. Internal Accounting

Standards Versus Flexibility
          The SAP application component Controlling (CO) contains all accounting functions necessary for effective controlling. If an organization divides accounting into internal and external viewpoints, CO represents internal accounting because it provides information for managers – that is, to those who are inside an organization and who are charged with directing and controlling its operations. CO includes cost and revenue accounting and, together with the Enterprise Controlling (EC) application components Profit Center Accounting (EC-PCA) and Executive Information System (EC-EIS), covers all aspects of American-style managerial accounting. It offers all controlling opportunities without being limited to legal requirements.
          With the SAP application component FI you will create your financial statements, like the balance sheet and the P&L-statement.  These procedures have to be according to standards or accepted accounting principles like US-GAAP or IAS.
          External accounting is referred to as financial accounting.  It produces the financial statement view of the organization.
          Internal accounting is referred to as managerial accounting or controlling.  It focuses on internal performance of the organization.
Major Differences
          Primary Users
           Freedom of Choice
           Behavioral Concerns
           Time Focus
           Time Span


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