Business Finance MOD003319 Report: Management vs Financial Accounting

This report provides a comprehensive overview of business finance, focusing on the distinctions between management accounting and financial accounting. It details the purpose, users, and regulatory aspects of each type of accounting, highlighting their differences in terms of frequency, content, and intended audience. The report further explores the importance of financial information for various stakeholders, including suppliers, investors, customers, management, and the government. By examining the roles and needs of each group, the report emphasizes how financial data supports decision-making processes and overall business performance. The conclusion summarizes the value of both management and financial accounting for internal and external users, reinforcing the significance of financial knowledge for informed decision-making across different sectors.

Business Finance

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business Financing relates to the finances and loans working in the sector. Finance is the
backbone of an organization which support in performing different kind of activities (Schwartz,
2017). The financial conditions are for the acquisition of inventory, commodities, manufactured
goods as well as other economic activity movements. In this report, the actual different between
management accounts and financial accounts is discussed and their usefulness to the users of
financial information.
TASK
Management accounting: Management accounting is however recognized as managerial
accounting and it can be recognized as a method of offering the managers with financial
information and support when making decisions. It is also used by the organisation's internal
team, and that's the only thing that makes it unique from financial accounting. Through this
process, financial details and records including invoice, overall balance statements are
exchanged with the firm’s management team via finance administration. The aim of this
accounting is to use the statistical evidence and to take smarter and more reliable decisions, to
monitor the organization, market practices and growth.
Financial accounting: The purpose of financial accounting is to provide accounting details
to each and every stakeholders and external regulators. It presents a complete time frame of the
financial situation of a company during an accounting year. Financial accounting is a specialist
accounting division that maintains record of the financial activities within a business. The
transactions are reported, summarized and demonstrated within actual in a financial report,
including a statement of income or a balance sheet, using specialized accounting standard and
guidance.
Difference between Management accounting and financial accounting
Basis For comparison Management accounting Financial accounting
Purpose It is intended mainly for
internal purposes.
This is mainly used for public
monitoring although it is often
checked by management
(Weygandt and et.al., 2018).
Regulation There is no need to follow any It is basically related with

kind of specific regulation
while preparing internal
managerial reports.
preparation of reports as per
the accurate accounting
regulation or standard.
User They users are mainly from
the organisation's management
Shareholders, creditors and
regulators are its consumers
Frequency There is no fixed pace for
planning and delivering the
declarations as manager can
review the performance at any
point of time.
Financial statements are to be
organized and described for
the accounting year.
Contents Monetary and non-monetary
transaction incorporates within
administration accounts.
Whereas, only financial
happening within company is
reported into financial
accounts.
For internal management, inside the business or firm those are accountable for overseeing
the business success and executing main decisions, management accounting information is
collected and confirmed for a much more particular purpose. These internal consumers can
include managers of all divisions, owners, and other personnel at all levels. The financial
accounting details mainly includes the financial reports, is conveyed by reporting. Usually the
financial reports include a statement of financial position, statement of revenue, statement of
cash flow, statement of retained earnings, and footnotes. Data regarding management economics
is also shared by reporting. The reports, even so, are much more clear and specific and can be
personalized as per the need of user (Wu and Law, 2016).
Importance of financial information for users
Suppliers: They mainly rely on the financial information in order to make
essential choices. Distributor relationships are important for an organisation's performance. Apart
from controlling customer interactions, an impressive view is required to allow the selection of
suppliers (Weetman, 2010). These explications are followed by the annual statements. The
manufacturing companies will understand essential financial data in order to determine necessary
steps while making investment in company.

Investors: Investment planning needs to be extensively studied, too. Such testing is
conducted only when there is enough financial reporting. The balance sheet and financial report
offer investors a consistent mechanism to illustrate the valuation of the company. The balance
sheet outlines the company 'financial structure by listing the net assets, liabilities and shares.
Investors use annual details to determine the viability of investment in a company. Analysts can
forecast future distributions based on the annual data. In fact, the financial statements will take
into account the danger involved with the deal. Investors agree to spend a particular amount
within company operation in order to attain a favourable return in future.
Customers: Consumers buy a company product and use services and they often help a
seller who is unable to meet their needs. The firm wants to rigorously build collaborations
between firms. Every company receives services from a specific origin and is therefore
susceptible to the store's material dangers. Unattainable inputs could have a substantial effect on
the firm especially when there is a factor that hinders performance. The customer’s financial
statement includes critical facts identifying the capabilities of a supplier. The balance sheet
includes financial state of an organization during a year.
Management department: Company benefits from financial reports by processing
annual records that contain accurate financial data. Managers have all the appropriate resources
to take into account the different aspects of financial analysis (Atrill, 2015). Financial
information eventually plays a key role when it comes to high availability managerial decisions.
It is so company executives can collect relevant knowledge easily on the basis of this. Because of
this they are willing to take disciplinary steps according to the company needs. In the other hand,
in the lack of economic statements, Company Executives can find it hard to take corrective
measures in time. This is so because lack of adequate data will lead to various kinds of situations
such as stiff competition from rivals, increasing operating cost etc.
Government: The authorities must determine the authenticity of the tax collected on the
income statements throughout the tax reports. The State regularly tracks economic activity by
analysing the annual reports from companies in developing markets. In addition, if numerical
details are not sufficient, the government will also find it hard to take the intelligent choice to
evaluate the appropriate information regarding of revenue.

CONCLUSION
In the end of report, it has been concluded that managerial accounting is useful for making
internal decision by the manager of company. On the other side financial accounting, is
beneficial for the external user to make different decision like investing in business or expanding
to other product line. Financial knowledge is important for various groups of users in the next
section of the report, including different stakeholders including the state, clients and others. All
has a stake in corporate accounting records.

REFERENCES
Books and Journals
Atrill 2015. Management Accounting for decision makers, 8th ed. London Pearson, Chapter 6
The budgeting.pdf
Weetman, 2010. Management accounting. 2nd ed. London FT Prentice Hall, Chapter 13 preparing
a budget.pdf
Schwartz, M. S., 2017. Business ethics: An ethical decision-making approach. John Wiley &
Sons.
Weygandt, J. J. and et.al., 2018. Managerial Accounting: Tools for Business Decision-making.
John Wiley & Sons.
Wu, L. and Law, S., 2016. A practical approach to teach graduate students to write persuasively
for business decision making.