Question

List seven key differences between Managerial Accounting and Financial Accounting.

Answer 1

Solution:

The Key difference between managerial accounting and financial accounting are as under:

1. Financial Accounting focuses on the preparation of financial statement of an organization to provide the financial information. Managerial accounting provides relevant information to the managers to make policies, plans and strategies for running the business effectively.

2. Financial accounting is compulsory but managerial accounting is not compulsory.

3. Financial accounting provides monetary information only. Managerial accounting provides monetary and non monetary information.

4. Format of financail accounting is specified but format under managerial acounting is not specified.
5. Financial Statements are prepared at the end of the accounting period which is usually one year. Under managerial accounting, The reports are prepared as per the need and requirements of the organization.

6. User of financial accounting are internal and external parties, however user of managerial accounting information is only internal management.

7. Financial reports prepared under financial accounting required to be published and audited by statutory auditors. Reports prepared under managerial accounting neither published nor audited by statutory auditors.