Key Differences Between Management Accounts and Financial Accounts

Business Finance

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Key differences between management accounts and financial accounts....................................1
Usefulness of management accounts and financial accounts to the users of financial
information..................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business finance is the set of activities which a business organisation undertakes to acquire
and converse their financial resources in order to ensure that the business operations are
appropriately conducted. Broadly there are two types of activities which the concept of business
finance has which are accounting and costing (Atrill 2014). The main aim of this report is to
build the understanding of accounting and its uses. For this purpose, in this report key
differences between management and financial accounts are evaluated. Furthermore, in this
report uses of these accounts to the users of financial information is also assessed.
MAIN BODY
Key differences between management accounts and financial accounts
Management accounts are informal statements which a business organisation develops in
order to ensure internal control in their organisation. On the other hand, financial accounts are
developed for the purposes of both maintaining internal control and fulfilling the legal
requirements. Both of these accounts are developed using different skills and principles, few of
these differences between both of the accounts are stated and evaluated below:
Basis of
difference
Financial accounts Management accounts
Aim A business organisation develops
financial accounts with various
purposes which include providing true
and fair monetary information about
the organisation, providing base for
economic decisions and fulfilling the
cycle of monetary information
communication.
On the other hand, a basic purpose to
develop managerial accounts is to assist
internal personnel in the process of
decision making. The management
accounts are also develop by the
organisation for making budgets and
making predictions about future
expenses and profits.
Scope The scope of financial accounts is
wider than management accounts as
these accounts are developed by every
business organisation operating in a
On the contrary, scope of management
accounts is narrower than management
accounts as usually small scale
organisations do not prefer to develop
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