Question

Please list at least 5 major differences between Managerial and Financial Accounting. Include in your discussion who the important players are in each, who is using the information, and what type of information is everyone focused on. Please explain why each type of accounting (managerial and financial) plays an important role in the organization.

Answer 1

The following points explain the major differences between financial accounting and managerial accounting: 1. Financial Accounting is the branch of accounting which keeps track of all the financial information of the entity. Management Accounting is that branch of accounting which records and reports both the financial and nonfinancial information of an entity.

2.Users of financial accounting are both the internal management of the company and the external parties while the users of the management accounting are only the internal management.
3: Only monetary information is contained in financial accounting. As against this, management accounting contains both monetary and non-monetary information such as the number of workers, the quantity of raw material used and sold, etc.

4.financial Accounting is done in the prescribed format, whereas there is no prescribed format for the Management Accounting. 5 Financial accounting information is required to be published and audited by statutory auditors. Unlike, management accounting, which does not require information to be published and audited, as they are for internal use only. Role of finance Accounting & management Accounting   Financial Accounting and Management Accounting are of great significance, in fact, they help the organisation in various ways. As financial accounting is helpful in the proper record keeping of innumerous transactions and comparison of the performance of two periods of an entity or between the two entities, while the management accounting is helpful in analysing the performance, making a strategy, taking an effective judgement and preparation of policies for the future.