Question

BELOW IS A DISCUSSION BETWEEN FINANCIAL AND MANEGERIAL ACCOUTING I WOULD LIKE YOU TO COMMENT ABOUT IT AND DEMONSTRATE MORE DEPHT AND TOUGHTS THAT SIMPLY STATING THAT "I AGREE" OR "YOU ARE WRONG" BUT HAVE TO MAKE SURE YOU PROVIDE MEANINGFUL AND RELEVANT RESPONSE POSTS WITH CLARIFYING EXPLANATION AND DETAIL. PLEASE DONT DO NO LITTLE EXPLANATION OR DETAIL BECAUSE I WILL NOT PASS.

Financial vs managerial accouting

Financial and managerial accounting work side by side to help run a successful business. Financial accounting creates reports to express past financial information to external sources such as investors, creditors, and government agencies, these reports are called financial statements. Managerial accounting creates reports to predict future expenses and budget for those expenses. Financial and managerial accounting both report on the money flowing through the company but the reports they make are for completely different reasons. Some of the differences include the time frame in which they are reported, who the reports are created for, and what the reports are created for.

Financial accounting is reported on a quarterly or annual basis. The information gathered reports on the past operations, financial position and cash flow. The financial statements created benefit investors, creditors, managers and government agencies. The reports created are audited by the CPA and GAAP for verification of accurate business finances. Managerial accounting is reported on daily or weekly to adjust product pricing or expenses that will help keep the company competitive. These reports hold details that help managers make decisions in running the business, unlike financial accounting the reports contain proprietary information. Reports are created on products, departments, and territories to prepare a plan of action moving forward, these plans are used to control operations.

Answer 1

Though Financial accounting and Management accounting are the branches of accounting, they differ from each other in few aspects in the way that the information they contain in them and the way they are used by the organization.

I would hereby like to demonstrate and support the given situation be citing more relevant and important difference's between the financial and management accounting which.will be as follows.

Financial accounting information is also intended for external users like investors, shareholders, creditors, government authorities etc where as management accounting information is mainly meant for internal users I.e, the management.

Financial accounting under company and tax laws needs to satisfy various statutory provision whereas it is optional in management accounting though its utility makes it highly desirable to adopt it.

Financial accounting shows profit or loss of the business as a whole but not the cost and profit for individual product's b, processes of departments whereas management accounting gives detailed information about individual product's, plants, departments etc.

Financial accounting is only concerned with the preparation of the transactions which have already taken place but management accounting is future oriented and concentrates on what is likely to happen in future though it may use past data for future projections.

Financial rrpots are normally prepared periodically or yearly basis and management accounting reports are prepared frequently I.e, monthly, weekly, or daily basis depending on managerial requirements.

Financial accounting prepares general purpose financial statements such as profit and loss account and balance sheet which are used by internal and external users and management accounting on the other side prepares specific purpose reports lime performance report of sales manager or any other such person , which are used by top level management.

Financial statements are published for general public and also sent to shareholders and are required to be audited by the professional concerned, management accounting statements are only meant for Internal use and hence they are neither published for general public nor required to be audited.

Financial management provides information in monetary terms only but management accounting may apply monetary or non monetary units of measurements like , information may be expressed in terms of rupees or units of quantity, machine hours, labour hours, etc.

Note:- I've given answer in this manner in order to provide as much information as I can by basing on my knowledge in the concerned subject which I think would be helpful to you and to be simple, I've answered it by way of differenciation.