Difference between Management and Financial Accounting

Business finance and accounting

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
Difference between management and financial accounting...................................................3
Users of financial information...............................................................................................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
Accounting is the process of recording the financial business transactions and
analysing and interpreting the result. It has different branches which are cost accounting,
financial accounting and management accounting. In this report, the key difference between
management and financial accounting is drawn along with importance of it to different users
of financial information.
MAIN BODY
Difference between management and financial accounting
Basis of comparison Management accounting Financial accounting
Aim The management accounting
information is mainly meant
for the management for
taking informed business
decisions (Zhang and Niu,
2019).
Here, the aim is to provide
relevant information to the
external users which
includes creditors, investors,
financial institutions etc.
Regulatory requirements There is no such statutory
requirement.
It is legally required to
comply with the statutory
requirements to prepare
financial accounts for all the
organizations.
Perspective It has a future perspective. It has a historical
perspective (Schroeder,
Clark and Cathey, 2019).
Nature of information It includes both financial
and non-financial
information which can be
used in preparation of
management accounting
reports.
It considers only financial
information for preparing
statements.
Governing principles In this, there is no standard
for preparing the
management accounting
statements. Thus, it is
Financial statement is
prepared based on Generally
Accepted Accounting
Principles. It may differ