In this article, we will learn in-depth about the difference between financial accounting and management accounting, and much more.
How Does Financial Accounting differ from Management Accounting?
The differences between financial accounting and management accounting are common questions to understand since each requires a different career path.
Financial accounting usually refers to the aggregation of financial accounting information whereas management accounting refers to the internal process used for accounts for business transactions.
There are a number of differences between them. Which is as follows
Financial Accounting vs. Management Accounting
| SL No | Financial Accounting | Management Accounting |
| 1. | It generates information that is used by external parties such as shareholders and lenders. | It generates information that managers and employees use within the organization. |
| 2. | Focuses on history: reports in the previous quarter or year. | Management accounting focuses on the present and future forecasts. |
| 3. | It provides detailed information on the organization’s financial position. | It provides complete and detailed reports regarding various information. |
| 4. | The main objective is to disclose the end results of the business, and the financial condition of the business on a specific date. | The main objective is to assist management by providing information that is used to plan, set objectives, and evaluate those objectives. |
| 5. | Publishes reports in a particular format in order to accurately compare different organizations. | Prepares management accounts in an informal format as well as on a company-based basis as necessary. |
| 6. | Prepares financial statements at the end of the accounting period, which is usually one year. | Prepares reports according to the organization’s needs and requirements. |
That’s all. I hope you got it. If not, do tell me what else I should explain here and I will write a new article about that. Please do not forget to comment.
You can also read:
- Accounting: Definition, objective, Evolution, Branches.
- Why do you choose your career as an accountant?
- Top 50 accounting interview questions and answers.
- Accounting quizzes.
