Skip to main content

DIFFERENT BETWEEN FINANCIAL ACCOUNTING AND MANAGERIAL ACCOUNTING

Financial accounting and managerial accounting are two distinct branches of accounting with different objectives and audiences. Here's an explanation of the key differences between the two:
Financial Accounting:   
 
1. Objective: The main objective of financial accounting is to provide financial information to external stakeholders, such as investors, creditors, regulators, and the general public. It focuses on the preparation and reporting of financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.
 2. Audience: Financial accounting is primarily aimed at external users who are interested in the overall financial performance, position, and changes in the financial position of an organization. These users rely on financial statements to make investment decisions, assess creditworthiness, and evaluate the financial health of a company.
 3. Reporting Frequency: Financial accounting follows a periodic reporting cycle, typically on a quarterly and annual basis, as required by regulatory bodies and accounting standards.
 4. Compliance: Financial accounting is subject to various regulatory requirements and accounting standards, such as the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) in the United States. Compliance with these standards ensures consistency and comparability in financial reporting across different organizations. 
5. Historical Perspective: Financial accounting primarily focuses on past financial transactions and events. It provides a historical view of an organization's financial performance and position.

 Managerial Accounting (also known as Management Accounting):

 1. Objective:
 The main objective of managerial accounting is to provide relevant financial and non-financial information to internal stakeholders, primarily managers and decision-makers within an organization. It focuses on providing information for planning, controlling, and decision-making purposes.
 2. Audience:
 Managerial accounting is intended for internal users, such as managers, executives, and employees, who require information to make informed decisions. It helps managers in areas such as budgeting, cost analysis, performance evaluation, and strategic planning.
 3. Reporting Frequency: 
Managerial accounting reports are prepared as and when needed by management. The reporting frequency can vary based on the requirements of the decision-making process.
 4. Flexibility: 
Managerial accounting offers more flexibility in reporting formats and information content. It can include both financial and non-financial information, such as forecasts, budgets, variances, and key performance indicators (KPIs), to support decision-making. 
5. Future-oriented:
 Managerial accounting focuses on providing information for future planning and decision-making. It assists managers in evaluating different alternatives, setting goals, and formulating strategies to achieve organizational objectives.
 6. Cost Analysis: 
Managerial accounting places significant emphasis on cost analysis and cost management. It involves analyzing costs, such as direct costs, indirect costs, fixed costs, and variable costs, to support pricing decisions, cost control, and profitability analysis. In summary, financial accounting is primarily concerned with providing financial information to external stakeholders for decision-making and compliance purposes, while managerial accounting focuses on providing relevant information to internal stakeholders to support planning, controlling, and decision-making within an organization.

Comments

Post a Comment

Popular posts from this blog

9 STEPS TO FOLLOW WHEN INVESTING IN BLACK-OWNED STOCKS AND OTHER INVESTMENTS

How to Invest in Black-Owned Stocks and Other Investments Investing in Black-owned stocks and other investments can be a way to support and promote economic empowerment within the Black community.  Here are some steps you can follow: #1 . Research Black-owned companies: Start by identifying Black-owned companies that are publicly traded. Look for information about their financial performance, industry, and growth potential. Resources like the Black-owned Stock Market Index (BOSX) or the Minority Business Development Agency (MBDA) can help you find relevant companies. #2. Understand your investment options: Consider whether you want to invest directly in individual stocks or prefer to invest in funds that focus on promoting diversity and inclusion. There are exchange-traded funds (ETFs) and mutual funds that specifically target companies with diverse ownership and leadership. #3 . Open a brokerage account: To invest in individual stocks, you'll need to open a brokerage account....
Post a Comment
Read more

6 BEST ADVICE FOR LIVING A GOOD LIFE

1. Do not spend so much time trying to be more physically attractive in order to just impress your crush rather than making yourself mentally attractive. Educate yourself, address your recurring toxic thoughts, deal with your insecurities and learn to be happy on your own. That's attractive. 2. Normalize saying “No” without needing to over-explain yourself. If someone is offended by your boundaries, that's their problem. The best weight you'll ever lose is the weight of other people's opinion of you. 3. Don't subscribe to other people's definition of “fun”. Fun doesn't have to mean drinking, partying and socialising. Fun can be a night in alone, getting lost in a book, a deep conversation, a walk, creating art, playing music, or doing your work. Fun is yours; you define it. 4. Before you get married, discuss bills, parenting styles, credit, debt, how to deal with family, what belief will be installed in your children, childhood traumas, sexual expectations, ...
Post a Comment
Read more

27 WAYS TO SAVE MONEY 2024

How to Save Money Now   Here's a detailed explanation of each of the 27 ways to save money: 1. Automate transfers:   Set up automatic transfers from your checking account to your savings account. This ensures that a portion of your income is saved consistently without relying on manual transfers. 2. Count your coins and bills: Collect loose change and small denomination bills in a jar. Over time, this can add up to a significant amount of savings. 3. Prep for grocery shopping:   Plan your meals, create a shopping list, and stick to it. This helps avoid impulse purchases and reduces food waste. 4. Minimize restaurant spending:   Cook at home more often and reduce dining out expenses. Prepare meals in advance and bring homemade lunches to work. 5. Get discounts on entertainment:   Look for coupons, deals, and discounts for movies, concerts, and other entertainment activities. Consider subscribing to email lists or using cashback apps for additional savings. 6. Map...
Post a Comment
Read more