Question

There are numerous differences between financial accounting and managerial accounting. Describe what you think are the most important differences and articulate what is the critical reason regarding why those differences exist. In particular, discuss why it may not be as important to protect users of managerial accounting information, compared with users of financial accounting information.

Answer 1

Difference	Fiancial Accounting	Managerial Accounting
Aggregation	Fiancial Accounting reports on the results of an entire business.	Managerial Accounting almost always reports at more detailed level such as profits by product, prodcut line, customer
Efficiency	Fiancial Accounting reports on the profitability of a business.	Managerial Accounting reports on specifically what is causing problems and how to fix it.
Proven Information	Financial accounting requires that records be kept with considerable precision, which is needed to prove that the financial statements are correct.	Managerial accounting frequently deals with estimates, rather than proven and verifiable facts.
Reporting Focus	Financial accounting is oriented toward the creation of financial statements, which are distributed both within and outside of a company.	Managerial accounting is more concerned with operational reports, which are only distributed within a company.
Standards	Financial accounting must comply with various accounting standards.	Managerial accounting does not have to comply with any standards when information is compiled for internal consumption
Timing	Financial accounting requires that financial statements be issued following the end of an accounting period.	Managerial accounting may issue reports much more frequently, since the information it provides is of most relevance if managers can see it right away.
Valuation	Financial accounting addresses the proper valuation of assets and liabilities, and so is involved with impairments, revaluations, and so forth.	Managerial accounting is not concerned with the value of these items, only their productivity.

Financial Accounting is a per standard on accounting, rules as per Government , accounts need to be published as per the prescirbed standards, timeslines need to be followed.

Managerial accounting is more for the companies management and internal purpose , need not follow any prescibed rules as it is for internal purpose and management reporting.

So Financial accounting is more important compared to managerial accounting for the below reasons.