Scribd
Upload
213 views

Differences Between Financial Accounting and Management Accounting

Financial accounting and management accounting differ in their objectives, users, and focus. Financial accounting provides information to external stakeholders like shareholders and creditors to comply with standards in preparing financial statements. Management accounting supports internal decision making and planning through more detailed and frequent operational reports for managers without compliance to standards. While financial accounting has a historical focus on results, management accounting can address budgets and forecasts with a future orientation.

Uploaded by

Alexandra
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
213 views

Differences Between Financial Accounting and Management Accounting

Financial accounting and management accounting differ in their objectives, users, and focus. Financial accounting provides information to external stakeholders like shareholders and creditors to comply with standards in preparing financial statements. Management accounting supports internal decision making and planning through more detailed and frequent operational reports for managers without compliance to standards. While financial accounting has a historical focus on results, management accounting can address budgets and forecasts with a future orientation.

Uploaded by

Alexandra
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Differences between Financial Accounting and Management Accounting.

Basis Financial Accounting Management Accounting


Meaning It is the accounting system It is accounting system that get
that get utilised for preparing utilised for the purpose of
financial statements. making policies, plans and
strategies in order to run their
business activities in effective
manner.
Objectives To provide financial Is to render adequate level of
information to the external support in planning and
stakeholders decision making.
Users Utilized by external users Used by internal users, such as
such as shareholders, employees and managers.
creditors and bankers, and
customers.
Aggregation Reports on the results of an Almost always reports at a
entire business. more detailed level, such as
profits by product, product line,
customer, and geographic
region.
Reporting focus Oriented toward the creation More concerned with
of financial statements, which operational reports, which are
are distributed both within only distributed within an
and outside of a company. organization.
Proven Requires that records be kept Frequently deals with
information with considerable precision, estimates, rather than proven
which is needed to prove that and verifiable facts.
the financial statements are
correct.
Standards Must comply with various Does not have to comply with
accounting standards. any standards when information
is compiled for internal
consumption.
Systems Pays no attention to the Interested in the location of
overall system that a bottleneck operations, and the
company has for generating various ways to enhance profits
profit, only its outcome. by resolving bottleneck issues.
Time period Concerned with the financial May address budgets and
results that a business has forecasts, and so that can have
already achieved, so it has a a future orientation.
historical orientation.
Timing Requires that financial May issue reports much more
statements be issued frequently, since the information
following the end of an it provides is of most relevance
accounting period. if managers can see it right
away.
Valuation Addresses the proper Not concerned with the value of
valuation of assets and these items, only their
liabilities, so it is involved with productivity.
impairments, revaluations,
and so forth.

You might also like