Difference between Management and Financial Accounts

Business Finance

TABLE OF CONTENTS
ESSAY.............................................................................................................................................3
Explaining the difference between management and financial accounts and its usefulness to
users of the financial information................................................................................................3
REFERENCES................................................................................................................................7

ESSAY
Explaining the difference between management and financial accounts and its usefulness to users
of the financial information
Accounting referred as the practice of recording, summarizing and classifying financial
terms of business transactions & an event along with interpretation of the results. It is been used
by an enterprise for keeping a record of their respective business transactions. FA & the MA are
seen as the 2 main classification of an accounting. FA stresses or emphasize in providing a true
& the fair review regarding financial health or state of an enterprise to several parties (Erwin,
2019). On contrary, MA aimed at facilitating the both quantitative and the qualitative
information to the managers in order to help them in making decisions & maximizing profits of
the company.
Financial accounting- It is reflected as the purest type of the accounting within which
adequate record is kept & financial data are been reported, for providing accurate and the
material information to their stakeholders (Azar, Zakaria and Sulaiman, 2019). It is mainly based
on several assumptions, convention and the principles such as materiality, going concern,
realization, consistency, conservatism, matching, historical cost and accrual. Final reports
comprises of the B/S, cash-flow statement & income statement that are framed in accordance to
the guidelines facilitated by pertinent statute.
MA- It also called as the managerial accounting as it is an accounting for the manager
that helps within management of an entity for framing the policies & forecasting, controlling &
planning the routine business operations of company (Weetman, 2019). In this qualitative as well
as quantitative data are been captured & assessed by MA. The main functional area of MA does
not limits to facilitating cost or only the financial information. It extracts appropriate and
significant information from the financials and the cost accounting to enable management in
establishing goals, decision making and budgeting. Under this, accounting could be done as pr
need of management which is weekly, quarterly, monthly etc. & there does not exist any format
based on which it needs to be reported.