Question

Class, describe the differences between financial and managerial accounting. Focus your post on the different type of users and how the information is used.

For this and all other Discussion questions, post an initial response (at least 200 words)

Answer 1

Solution) Financial accounting and managerial accounting is both the branches of accounting and are the important tool of the business. Financial accounting is used to present the financial position of the business to its external stakeholders. It presents the specific period of time in the past and enables the users to see how the company has performed. Whereas, Managerial accounting is used by the managers to make decisions on the day to day operations of the business. Like financial accounting, managerial accounting is not based upon the past performance, but it uses the present and future trends.

Managerial accounting is used internally by managers for decisions making, whereas financial accounting is used to present the performance of the company to outside stakeholders.

Financial accounting reports are prepared at the end of the accounting period or fiscal period and are publically disclosed in annual reports of the companies for the use of investors, government agencies, research agencies etc. Whereas, managerial accounting reports are prepared by managers on daily, weekly, monthly basis as per the requirements and urgency of decisions to be taken and are not publicly disclosed as they are meant to be used for the internal decision-making process.,mainly used by managers, the board of directors and internal management.

Financial accounting is the base for setting the trends used in managerial accounting. Both are important tools for the working of the company both in present and in long run.