Write the differences between financial accounting and management accounting.

Banking & FinanceManagementCompanies/Organisations

The major differences between financial accounting and management accounting are as follows −

Financial accounting

  • It provides financial information to parties by preparing financial statements of a company.

  • It is compulsory and covers only information related to monetary.

  • Its main objective is to prepare financial information.

  • These have specified formats to prepare.

  • Prepared based on GAAP and is generally prepared once in a year.

  • These are published and audited by statutory auditors

  • It has historical perspective.

  • Shareholders, lenders etc. use financial accounting.

Management accounting

  • It provides information which helps in making policies, plans and strategies for effective business.

  • It is not compulsory and covers both information related to both monetary and non- monetary.

  • Its main objective is to assist management by providing information on various aspects.

  • There is no specified format to prepare.

  • There are no standard principles in preparing this.

  • These are neither published nor audited by statutory auditors.

  • There is a confidentiality.

  • It has futuristic perspective.

  • Managers and employees use management accounting.

Updated on 25-Jul-2020 06:56:25