Difference Between Financial Accounting and Management Accounting

Business
Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
Key difference between management accounts and financial accounts..........................................3
Definition of financial accounting:..............................................................................................3
Definition of management accounting:.......................................................................................4
Comparison - Between Financial Accounting and Management Accounting:...........................4
Important differences between financial accounting and management accounting:...................5
Usefulness to the users of financial information:........................................................................6
Usefulness to internal users:....................................................................................................6
Usefulness to external users:...................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In this present world; concept of both financial and management accounting has changed its
opinion among various stakeholders; this concept is no longer stick to book keeping and
information providing. With the introduction of management accounting, non commerce
background users such as managers and top level managers get support to take crucial decisions
for organizations growth. This project report will discuss the difference between both evaluative
accounting concepts; financial and management accounting and also how it is useful for users in
context of financial information’s.
Key difference between management accounts and financial accounts
Accounting refers to the process of recording, classifying and summarizing in monetary terms,
business transactions and events and interpreting the results. Question: What is the difference
between Financial Accounting and Management Accounting? It is used by entities to keep track
of their financial transactions. Financial accounting and management accounting are two
branches of accounting. Financial accounting emphasizes giving a fair and unbiased view of the
company's financial position to various parties (Aktas, Croci and Petmezas, 2015).
In contrast, management accounting aims to provide both qualitative and quantitative
information to managers, so as to assist them in decision making, and thus maximize profit. This
article is designed to help you learn the important differences between financial accounting and
management accounting.
Definition of financial accounting:
Financial accounting is an accounting system concerned with preparing financial statements for
external parties such as creditors, shareholders, investors, suppliers, lenders, customers, etc. It is
the purest form of accounting in which proper record keeping and financial reporting are done to
provide relevant and physical information to its users (Atrill, 2005).
Financial accounting is based on various assumptions, principles and conventions such as
concern, materiality, matching, realization, conservatism, stability, accumulation, historical cost