Discuss The Difference Between Managerial Accounting And Financial Accounting

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Financial accounting is the analysis, classification and recording of financial transactions and reporting such information to respective users especially external users who use the information to make decisions about their engagements with the entity. In financial accounting general purpose financial statements are used for external reporting. The development of the statements is in accordance with standards imposed by public through respective national professional bodies, International Accounting Standards Board and respective company Acts for various nations. On the other hand, managerial accounting is category of accounting that provides special purpose statements and it reports to management and other persons inside the organization. Information generated by this type of accounting is for internal uses and is not restricted to standards or legal requirements .Management accounting is future –oriented therefore it is proactive unlike financial accounting which is historical and relies of past information to report to external users. It is required to make decisions that affect the organization. …show more content…

However, financial accounting tends to provide summarized information based on quantitative information only and does not go into details on qualitative information. Reports in financial accounting are more summarized as opposed to being detailed. Financial accounting is based on concepts of monetary value in nature that is no qualitative information is used in financial accounting. On the other Managerial accounting incorporate both monetary and non-monetary aspects of accounting that is to say it incorporates qualitative aspects like loss in efficiency and by so doing it helps managers to make very important operational and financial

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