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Difference Between Financial Accounting and Management Accounting PDF

Financial accounting and management accounting differ in their focus and purpose. Financial accounting aggregates information for external parties like shareholders and lenders, focusing on historical reports. Its main objective is to disclose the financial position and results of a business. Management accounting generates internal information for managers and employees to assist with planning, setting objectives, and evaluating performance. It provides detailed current and future forecasts tailored to an organization's needs. While financial accounting prepares standardized reports, management accounting prepares informal customized reports.

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224 views

Difference Between Financial Accounting and Management Accounting PDF

Financial accounting and management accounting differ in their focus and purpose. Financial accounting aggregates information for external parties like shareholders and lenders, focusing on historical reports. Its main objective is to disclose the financial position and results of a business. Management accounting generates internal information for managers and employees to assist with planning, setting objectives, and evaluating performance. It provides detailed current and future forecasts tailored to an organization's needs. While financial accounting prepares standardized reports, management accounting prepares informal customized reports.

Uploaded by

Yakkstar 21
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Difference between Financial Accounting and

Management Accounting [Notes with PDF]


everythingaboutaccounting.info/2020/02/difference-between-financial-accounting-and-management-
accounting.html

February 20, 2020

In this article, we will learn in-depth about the difference between financial accounting and
management accounting, and much more.

How Does Financial Accounting differ from Management


Accounting?
The differences between financial accounting and management accounting are
common questions to understand since each requires a different career path.

Financial accounting usually refers to the aggregation of financial accounting


information whereas management accounting refers to the internal process used for
accounts for business transactions.

There are a number of differences between them. Which is as follows

Financial Accounting vs. Management Accounting

1/2
SL Financial Accounting Management Accounting
No

1. It generates information that is used It generates information that managers


by external parties such as and employees use within the
shareholders and lenders. organization.

2. Focuses on history: reports in the Management accounting focuses on the


previous quarter or year. present and future forecasts.

3. It provides detailed information on the It provides complete and detailed reports


organization’s financial position. regarding various information.

4. The main objective is to disclose the The main objective is to assist


end results of the business, and the management by providing information
financial condition of the business on that is used to plan, set objectives, and
a specific date. evaluate those objectives.

5. Publishes reports in a particular Prepares management accounts in an


format in order to accurately compare informal format as well as on a company-
different organizations. based basis as necessary.

6. Prepares financial statements at the Prepares reports according to the


end of the accounting period, which is organization’s needs and requirements.
usually one year.

That’s all. I hope you got it. If not, do tell me what else I should explain here and I will
write a new article about that. Please do not forget to comment.

You can also read:

Accounting: Definition, objective, Evolution, Branches.


Why do you choose your career as an accountant?
Top 50 accounting interview questions and answers.
Accounting quizzes.

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