Discuss the difference between Financial Accounting and Managerial Accounting, especially in relationship to costs. Provide a definition of Opportunity Costs and Accounting Costs and discuss how we can further analyze these costs and provide subcategories of each. Solution The differences between management accounting and financial accounting include:[1] Management accounting provides information to people within an organisation while financial accounting is mainly for those outside it, such as shareholders Financial accounting is required by law while management accounting is not. Specific standards and formats may be required for statutory accounts such as International Financial Reporting Standards. Financial accounting covers the entire organisation while management accounting may be concerned with particular products or cost centres. Managerial accounting is used primarily 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 created for a set period of time, such as a fiscal 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 Forecasting reports Budget analysis and comparative analysis Feasibility studies Merger and consolidation reports Financial Accounting, on the other hand, concentrates on the production of financial reports, including the basic reporting 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 creditors. .

1. Discuss the difference between Financial Accounting and Managerial Accounting, especially in
relationship to costs. Provide a definition of Opportunity Costs and Accounting Costs and
discuss how we can further analyze these costs and provide subcategories of each.
Solution
The differences between management accounting and financial accounting include:[1]
Management accounting provides information to people within an organisation while
financial accounting is mainly for those outside it, such as shareholders
Financial accounting is required by law while management accounting is not. Specific
standards and formats may be required for statutory accounts such as International
Financial Reporting Standards.
Financial accounting covers the entire organisation while management accounting may be
concerned with particular products or cost centres.
Managerial accounting is used primarily 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 created for a set period of time, such as a fiscal 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 Forecasting reports
Budget analysis and comparative analysis
Feasibility studies
Merger and consolidation reports
Financial Accounting, on the other hand, concentrates on the production of financial
reports, including the basic reporting 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 creditors.