This document discusses the key differences between financial accounting and management accounting. Financial accounting provides information to external users like investors and creditors, focusing on the overall financial performance and position of a company through financial statements. Management accounting provides information to internal users like managers to help with planning, decision making, and controlling the business. While financial accounting follows strict accounting standards, management accounting has more flexibility and focuses on future projections and detailed analysis to meet the specific needs of management.

1. Management AccountingManagement Accounting
Presented toPresented to
Ms Roushan Ara SultanaMs Roushan Ara Sultana
Assistant ProfessorAssistant Professor
FBA, USTCFBA, USTC
Presented by
MEHEDI HASAN
ID 1114
Group: Keen Orbit
7th Semester
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2. Management AccountingManagement Accounting
• provide information to employees,
managers, owner-manager
and auditors.
• Management accounting is concerned
with accounting information which is
useful to management.
• The maintenance and creation of economic value or wealth.
• Accounting that concentrates on reporting to people inside
the business entity is called “Management Accounting”
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3. TopicTopic
Management AccountingManagement Accounting
vsvs
Financial AccountingFinancial Accounting
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5. Financial and
Management Accounting
• The primary questions about an
organization’s success that decision
makers want to know are:
What is the financial picture of the
organization on a given day?
How well did the organization do during a
given period?
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6. Financial and
Management Accounting
• Accountants answer these primary
questions with three major financial
statements.
– Balance sheet – shows financial picture on
a given day
– Income statement – shows performance
over a given period
– Statement of cash flows – shows
performance over a given period
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7. Financial and
Management Accounting
• Annual report - a document
prepared by management and
distributed to current and potential
investors to inform them about the
company’s past performance and
future prospects
– The annual report is one of the most
common sources of financial
information used by investors and
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8. Financial and
Management Accounting
The major distinction between
financial and management accounting
is the users of the information.
– Financial accounting serves external
users, such as investors, creditors, and
suppliers.
– Management accounting serves internal
users, such as top executives,
management, and administrators within
organizations.
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9. Financial and Management
Accounting
 Record of financial history vs. Emphasis on the
future
 GAAP vs. Own rules
 Objectivity and verifiability vs. Flexibility
 Emphasis on accuracy vs. Acceptance of
estimates
 Focus on company as a whole vs. Focus on
segments of a company
 Bound by conventional accounting systems vs.
Use of other disciplines such as Economics,
Statistics, OR, OB, etc
 Governed by Regulatory Bodies vs. Freedom of
choice
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10. Financial and Management Accounting
An attempt may now be made to compare and study the two types
of accounting on basis of the characteristics of the data used. It
is presented through the box- 1.1, given below.
Box 1.1
Features of data Provided by Financial Provided by
Accounting Management accounting
1. Period After a stated period At frequent intervals
2. Time Historical data Current and future data
3. Unit of expression Money only Any statistical unit
4. Nature Actual data Projected data
5. Specificity Aggregates Detailed analysis
6. Description Money consequences Events
7. Reality Objective Subjective
8. Precision Pie to Pie accuracy May be guess-work
9. Principles Double entry system Cost benefit analysis
10. Legality Obligatory Optional
11. Purpose Overview of entire Analytical details of such
Business activity activities as call for decisions10

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12. Thank you
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