15 Differences between Financial and Managerial Accounting
Both financial accounting and managerial accounting seem similar and almost serve the same purpose but glaring differences exist. The following are areas in which financial and managerial accounting differ and what sets them apart. Accounting software also works efficiently in both accounting concepts to the benefit of a small, medium or large business out there.
Detailed Comparison between Financial Accounting and Managerial accounting
Unbeknownst to many people, managerial accounting vs financial accounting mean there's so much variance between the two as well as areas where they seem the same. Here's a look at financial vs managerial accounting areas of difference.
|1||Financial accounting reports are consumed by public stakeholders.||Managerial accounting information is for internal purposes.|
|2||Focuses mostly on offering information on those outside the organization.||Heavily focused on providing information to persons inside the organization.|
|3||Financial accounting heavily used by public regulators, creditors and shareholders.||Managerial accounting information is confidential and used largely by managers only inside the company.|
|4||Financial accountancy data, information and analyses reports are historical in nature.||Managerial accounting information is heavily forward-looking.|
|5||Financial accounting reports and other material are case based.||Information for managerial accounting is based on model and abstract to some level in support of decision making.|
|6||Information in financial accounting computation follows the general accepted financial accounting norms and standards.||Information for managerial accounting computation is guided by the managerial needs identified within a specific company.|
|7||Financial accounting is encompassing, focusing on the entire organization.||Managerial accounting is specific offering detailed and divided information on diverse things such as tasks, department, operations, specific activities, sales, products.|
|8||Financial accountancy is legally required and expected by law.||Managerial accounting is not required by any law or norm.|
|9||Financial accounting reports are derived after a set period of time such as a fiscal year or quarter for those outside the company.||On the other hand managerial accounting reports could be provided to cover any specific period such as a day, month, week or month.|
|10||Financial accounting reports are predictively valuable and historically factual to help those wishing to invest or get involved with the organization to make better financial decisions.||Managerial accounting specifically deals with confidential material and exclusively for a company's top management to make critical decision.|
|11||Reports in financial accounting are of the entire results of the business.||Managerial accounting reports are usually detailed and poignant and can be for geographic area, customer, product, service among others.|
|12||Financial accounting largely looks at reports particularly to show company's profitability and efficiency.||Managerial accounting offers reports on areas of weaknesses and problems and how they should be fixed to the concerned management.|
|13||Financial accounting requires reports to be maintained with acute precision so that their accuracy is not in question.||Managerial accounting works with estimations and hardly on precise, verifiable or proven details or facts.|
|14||Financial accounting mostly ends with financial statements preparation and distributed externally and internally.||Managerial accounting usually concerns itself with creating operational based reports and distributed to the management inside the company.|
|15||Financial accounting largely concerned on the results or outcome and not the overall company system of operations.||Managerial accounting definitely interested on the bottlenecks and where they manifest in operations and fixing them to enhance profits.|
Definition of Financial Accounting and Managerial Accounting
In financial & managerial accounting the differences are glaring but with similar approaches and uses, especially with variances in accounting standards, compliances and stakeholders or targeted audience. The main reason for managerial accounting is the production of valuable and useful information that a company can use internally. The information is collected by managers particularly to enhance strategic planning and come up with practical goals. Financial accounting does have internal value, but mostly needed by stakeholders outside an organization since it seeks to disclose the financial health of the company and its performance.
Essential managerial and financial accountancy is based on basics of accounting as detailed in Horngren's financial & managerial accounting that seeks to offer those interested the different ways managerial accounting can be perfected to help businesses and individuals arrive at the most efficient business decisions.
Freshbooks - Unique Software for Financial and Managerial Accounting
The nature of financial accounting and managerial accounting requires reports and financial statements accurate, useful and verifiable. Accounting software makes this easy, such as FreshBooks in different ways such as:
- Streamlining the invoicing process
- Expenses organization and tracking
- Tracking time and invoicing it
- Collaborating on projects
- Acceptance of online payments automatically
- Every ready reports-powerful and easily accessible any accountant will find most efficient and helpful
- Mobile sync guaranteeing connection with clients wherever one is
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