Difference Between Financial Accounting And Managerial Accounting
Financial Accounting is a field of accounting concerned with a company’s financial transactions. It uses standardized accounting guidelines to record, summarize and present the transactions to mainly external users periodically by means of Financial Statements. Creditors and other lenders like banks and other financial institutions, Government Authorities, Prospective Investors, Customers, Competitors and Regulatory Authorities are some of the External Users who may use these Accounting information for various decision making purposes. Managerial Accounting also referred to as Cost Accounting is a branch of accounting that helps in identifying, analyzing interpreting, preparing and communicating both Financial and Non-Financial information …show more content…
Another difference is the issuance period, where in Financial Accounting it is provided at the end of an accounting period (quarterly or annually) whereas in Managerial Accounting it is provided as per the management requirements and there is no set period for the issuance .Compliance to accounting standards too could be considered as another difference .Financial accounting information needs to be presented according to the Generally Accepted Accounting Principles(GAAP) as it is issued to external parties unlike Managerial Accounting information which does not need to be in compliance with various standards as it is for the internal use only . Also it could be stated that managerial accounting information is unique to an organization but Financial Accounting information has a standardized layout. Another difference is that, for managerial accounting the information needs to be specific and detailed to suit the management’s requirements e.g. - for each department or branch unlike financial accounting information which is general and contains less details as it is published for the whole …show more content…
It consists of all the income which causes changes in the stock holder’s equity e.g.-unrealized gains or losses, retirement investments or pension schemes, foreign currency adjustments etc. This statement helps in the future planning of the organization. Statement of Cash flows is a statement that provides information regarding the cash inflows and outflows of a business. Cash generated is categorized under three headings in the Statement of Cash flows namely Operating Cash Flows, Investing Cash Flows and Financing Cash Flows. It identifies the liquidity position of an entity and helps managers take relevant measures
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