Question

Please explain how management accounting differs from financial accounting.​

Answer 1

Difference between financial accounting & management accounting

Sr.No.	Financial Accounting	Maangerial Accounting
Coverage over enterprise	Financial Accounting deals with business transsactions & is based on the monetary transactions of the enterprise as a whole.	Managerial Accounting is primarily based on the data available from Financial Accounting. But it can be subdivided unit wise, section wise, productwise, as per need of the managerment
Periodicity of reporting	Its main focus is on recording and classifying monetary transactions in the books of accounts. Preparation of financial statements at the end of every accounting period, normally, Quarter, Half year & yearly basis.	Periodicity is not fixed. It may be per day, per week or as per nee of the management. It provides necessary information to the management , helpful in the process of planning, controlling, performance evaluation and decision making.
subjectivity	Reports should always be supported by relevant figures and it emphasizes on the objectivity of data.	Reports may contain both subjective and objective figures. Maily it is on objectivity basis.
Report user	Reports as per Financial Accounting are meant for stakeholders for differecnt purposes, & the management mainly compliance purpose. However this data may be used in managerial accounting.	Reports are prepared in Managerial accounting are meant for management and as per requirement of management.
Audit of reports	Reports are always subject to statutory audit.	Reports are out of purview of audit.
Performance evaluation	It ascertains , evaluates and exhibits the financial strength of the whole business. It can be compared with another business unit.	It evaluates the sectional /departmental performance within the emnterprise as well as the entire performance of the business.