Essay on Explain The Difference Between Financial And Management Accounting

Essay on Explain The Difference Between Financial And Management Accounting

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Unit #3
1. Explain the difference between financial and management accounting.
Financial accounting is used to meet the needs of external users and management accounting is used to meet the needs of internal users.
Financial accounting tends to give external users more dated and historical information supplied in annual financial reports, whereas management accounting provides more current, day-to-day or week-to-week information in order to meet the needs of internal users. This is because internal users, such as manager and employees within a business, desire to predict or anticipate future impacts, such as a budget deficit and account for them, or respond to changes in the environment and control performances.
Management accounting, uses financial information from the past, present, and anticipated future, to create an overall package of managerial information. On the contrary, financial accounting is used to prepare fiancial statements for the public to see or broad use. In many public sector organizations financial accounting is used to conform to an approved chart of accounts.
2. Discuss the need for accounting standards and explain how government accounting standards are set in Canada.
Having accounting standards is important because it sets a basis for what is acceptable as a credible report. It specifies how to create accountable and understandable clear presentations of transactions and other events in financial statements. In addition, this information will all its audience to use this information for deductive reasoning and future courses of action by providing financial statements that give a candid or honest representation of an organizations financial position.
In Canada, accounting standards are set under the Public...

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...urces controlled by an organization and they way in, which they are financed. It provides a snapshot or pinpoint in time on the worth of an organization and the results of the organization 's cash flows.
• Second, the function of the statement of operations is to cover the financial transaction of an organization over a period of time (monthly, quarterly, semi-annual, annual).
• Third, the function of the statement of net debt describes the changes in an organization 's net assets during the reporting period. In other words, it shows how much an organization has increased or decreased its net assets or net debt.
• Last, the function of a cash flow statement is to display changes in cash and cash equivalents and the flow of cash from where it goes and comes from. Overall, it provides, in a statement, the current financial viability of an organization 's operations.

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