Financial Accounting vs Management Accounting By Aneek Gupta
Consideration

Financial Accounting

Management Accounting

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Financial accounting vs management accounting By Aneek Gupta

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Financial accounting vs management accounting By Aneek Gupta

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Financial accounting vs management accounting By Aneek Gupta

  1. 1. Financial Accounting vs Management Accounting By Aneek Gupta Consideration Financial Accounting Management Accounting External vs. Internal A financial accounting system produces A management accounting system information that is used by parties external to the produces information that is used organization, such as shareholders, bank and within an organization, by managers creditors. and employees. Segment reporting Pertains to the entire organization or materially May pertain to smaller business significant business units. units or individual departments, in addition to the entire organization. Focus Format Planning and control Information Users Reporting frequency and duration Optional Objectives Legal/rules Accounting process Thanks Financial accounting focuses on history. Management accounting focuses on future & present. Financial accounts are supposed to be in No specific format is designed for accordance with a specific format, so that financial management accounting systems. accounts of different organizations can be easily (Formal and informal recordkeeping) compared. (Formal recordkeeping) Financial accounting helps in making investment Management accounting helps decisions, and in credit rating. management to record, plan and control activities to aid decisionmaking process. Quantitative and monetary Quantitative and qualitative; Monetary and non-monetary Financial accounting reports are primarily used Management accounting reports by external users, such as shareholders, bank and are exclusively used by internal users creditors. viz. managers and employees. Well-defined - annually, quarterly. (Verifiable) semi-annually, As needed - daily, weekly, monthly. Preparing financial accounting reports are There are no legal requirements to mandatory especially for limited companies. prepare reports on management accounting. The main objectives of financial accounting are : i) to disclose the end results of the business, and ii) to depict the financial condition of the business on a particular date. The main objectives of Management Accounting are to help management by providing information that used by management to plan, evaluate, and control. Drafted according to GAAP - General Accepted Drafted according to management Accounting Procedure. suitability. Follows a full process of recording, classifying, Cost accounts are not preserved and summarising for the purpose of analysis and under Management Accounting. The interpretation of the financial information. necessary data from financial statements and cost ledgers are analysed.

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