Difference between management and financial accounting

BUSINESS FINANCE

Difference between management and financial accounting...................................................3
Importance of financial information to its users....................................................................4
REFERENCES...........................................................................................................................6

Difference between management and financial accounting
Management accounting is also called as managerial accounting is the accounting
practice used by the top-level management and employees of the organization to review and
analyse its internal policies to improve the day to day operations of organization.
Financial accounting is concerned with the procedure of recording, classifying and
summarizing the business transactions in monetary terms and then interpreting the results.
Financial accounting aim towards providing a fair and true view of the financial position of
company to the other parties.
Management Accounting Financial Accounting
The major objective of management accounting
is to provide management with various plans to
set organizational goals and objectives.
The main aim of financial accounting is to
disclose the end results of the business and to
identify the financial condition of business on
particular date.
The information provided by management
accounting is just for the use of internal parties
like organization, managers and employees.
On the other hand, financial accounting
produces information for external parties who
are interested in the company like employees,
government and shareholders.
Management accounting focuses on both
present and past information to evaluate the
performance of the managers and then develop
various goals and objectives to improve the
overall performance of employees.
Financial accounting focuses on history which
means that it generates information on the basis
of past data and performance of the company.
The reports produced by management
accounting are only used for the internal
purposes therefore there are no set of standards
that needs to be followed.
The rules and regulations in financial
accounting are governed by various standards
like GAAP (generally accepted accounting
principles) or IFRS (internationally financial
reporting standards) (Schmidt, 2017). It is
compulsory for every firm whether big or small
to follow these standards.
The frequency and duration of reporting
management accounting is according to the
preference of its senior level executives which
can be daily, weekly, monthly or yearly.
The financial accounts are mostly made
annually like preparation of income statement,
balance sheet and cash flow statements.
The information provided by management
accounting is focused towards company’s goals
Whereas the information provided by financial
accounting is completely verifiable and relied