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Write the differences between financial accounting and management accounting.
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.
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