Management Accounting and Financial Accounting Essay

The differences between management accounting and financial accounting include1 1. anxiety accounting provides information to people within an organization while financial accounting is mainly for those outside it, such(prenominal) as shareholders 2. Financial accounting is necessary by law while management accounting is not. Specific standards and formats may be required for statutory accounts such as in the I.A.S International report Standard within Europe. 3. Financial accounting covers the entire organization while management accounting may be concerned with particular products or personify centres. Managerial accounting is used in general by those within a company or organization. Reports can be generated for any period of time such as daily, weekly or monthly.Reports are considered to be future looking and have forecasting value to those within the company. Financial accounting is used primarily by those outside of a company or organization. Financial reports are usually c reated for a set period of time, such as a pecuniary year or period. Financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company. Management Accounting is the branch of Accounting that deals primarily with confidential financial reports for the exclusive use of top management within an organization. These reports are prepared utilizing scientific and statistical methods to arrive at certain monetary values which are then used for decision making. Such reports may include* Sales fortune telling reports* Budget analysis and comparative analysis* Feasibility studies* Merger and consolidation reportsFinancial Accounting, on the other hand, concentrates on the production of financial reports, including the basic coverage requirements of profitability, liquidity, solvency and stability. Reports of this nature can be accessed by internal and external users such as the shareholders, the banks and the credi tors.