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.

Class,

Financial Accounting is mainly correlated to financial statements like income statements and balance sheets, debits & credits, etc. Managerial Accounting is focused on making cost efficient decisions to keep firms thriving in the future and present. Financial Accounting usually looks at the past, while Managerial focuses on the right now and the upcoming. Managerial Accounting does not have to follow all of the generally accepted accounting principles, because it deals primarily with external financial statements, while financial accounting deals mainly with internal financial statements.

Answer 1

Financial & Management accounting

Accounting in general involves recording of transactions that involve money , for use in future---say for submission to authorities or for internal analysis.

The former is termed financial accounting-- in which case periodic financial statements are prepared for use by various parties like the state and federal governments, existing shareholders, potential investors,debtors& creditors , lenders & borrowers ,employees and so on.

Managerial accounting,on the other hand, uses the above recorded financial details& prepared statements ,to generate qualitative as well as quantitative reports , as desired by the management --from time to time --or on a regular basis. That helps the management in policy formulations that aid the day-to-day functioning of the business entity.

Thus,both are complementary to each other--only when financial accounting is done properly, managerial accounting can generate useful & meaningful reports ---here again to be followed day-to-day.

Major Differences can be tabulated as follows:
Financial Accounting	Managerial Accounting
1. Must for submission to various state & federal authorities	Optional--prepared voluntarily at the behest of the management for self-improvement.
2.For use of internal as well as external people	Mainly intended for internal use
3.Provides financial information mainly to outsiders	Assists the management in policy decisions,budgeting & controlling costs
4. Normally 4 statements are required such as Income Statement,Balance Sheet,Statement of Changes to Equity & the cash flow statement ,to be submitted after certfication by the auditors , for true & fair view of the financial state of affairs of the company.	No such specific formats --prepared as per the individual requiremtents of different companies
5. Generally audited financial accounting records such as the above are submitted at the accounting period-end /year	There are no such time specifications--but large companies stick to the financial accounting time-frame ,on their own , to form meaningful opinion.
6.Accurate & fair accounting & record-keeping as per the applicable norms(GAAP/IFRS)(ie. Compliance)is the main aim .	Report generation for analysis & better cost-efficient performance-- is the main aim.No question of any compliance.Formats are drawn up by executives over the period.
7. Auditing and certification is absolutely necessary--as it is reporting to the owners/ shareholders.	Even though dependent on the audited statements--it is not meant for use by external people--so there are no such auditing requirements.
8. Deals everything in monetary(financial) terms-- as shareholders' money is involved.	Concerned both with monetary & non-monetary details--so as to come to a definitive opinon.
9. Independent of managerial accounting	Totally dependent on Financial accounting.

Yes. It is fully agreed with all the points that have been detailed in the question about both types of accounting.

Countered point by point:

1.Financial accounting is recordation & compliance , whereas, managerial accounting is all about report generation in the required formats ,but fully based on the financial records that have been created ,verified & maintained by the financial accounting system.Managerial accounting is able to take those cost-efficient decisions,only because of the records created by the financial accounting system,in place.

2.Financial accounting creates history & managerial accounting refers to that,studies the past performance and predicts the future, in the form of budgets & forecasts.

3.. As financial accounting records are meant for submission to appointed authorities, for use of the investor's funds,they follow the rule book as liad down from time to time and need to comply with all formalities & deadlines.Whereas, managerial accounting, although can be simulataneous , analyses only the submitted figures for drawing up conclusions & forecasts.So, the latter does not need anymore compliance ,on its part.

4. Financial accounting records financial events as & when they happen.Accuracy & timing is given utmost importance.Managerial accounting always does a postmortem, to minimise future accidents.