Difference between financial accounting and management accounting

Question

Accepted Answer

Financial accounting focuses on external reporting and historical financial data, while management accounting focuses on internal decision-making and future-oriented data.

Financial accounting is concerned with recording, summarizing, and reporting financial transactions of a company.
Management accounting provides information to internal stakeholders for planning, controlling, and decision-making purposes.
Financial accounting follows generally accepted accounting principles (GAAP) and is mandatory for external reporting.
Management accounting is not bound by GAAP and is flexible in terms of the information it provides.
Financial accounting focuses on historical data, such as income statements, balance sheets, and cash flow statements.
Management accounting focuses on future-oriented data, such as budgets, forecasts, and cost analysis.
Financial accounting is primarily used by external parties like investors, creditors, and regulatory authorities.
Management accounting is primarily used by internal parties like managers, executives, and employees.
Example: Financial accounting prepares financial statements for shareholders, while management accounting provides cost analysis to help managers make pricing decisions.

Accepted Answer

Financial Accounting is an accounting system that focuses on the preparation of a financial statement of an organization to provide financial information to the interested parties.Both internal and external usersOnly internal usersNature of statements preparedGeneral-purpose financial statements.

Management accounting The accounting system which provides relevant information to the managers to make policies, plans and strategies for running the business effectively is known as Management Accounting.

Accepted Answer

Managerial accounting is concerned with providing information to managers i.e. people inside an organization who direct and control its operations. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization.

Accepted Answer

The certification for each of these types of accounting is different as well. People who have been trained in financial accounting have a Certified Public Accountant designation, while those with a Certified Management Accountant designation are trained in managerial accounting.

Difference between financial accounting and management accounting

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