Differences between FINANCIAL and MANAGEMENT ACCOUNTING

Differences between FINANCIAL and MANAGEMENT ACCOUNTING

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Management Accounting

Management also known as cost accounting is system of identifying, recording, analyzing and presenting data relating to organization’s own products/services, with main focus on entity’s internal system, cost accounting helps the helps at three namely planning, control and decision making:
Management accounting gathers cost information and relates it to cost objects, cost centers, budgets, standard costs ,processes, activities or products; variance analysis and finally to profit of organization

 

Differences between FINANCIAL and MANAGEMENT ACCOUNTING

 

 

TYPE OF DIFFERENCE

 

MANAGEMENT ACCOUNTING

 

 

FINANCIAL ACCOUNTING

USERS Internal users e.g. managers and employees External users e.g. stakeholders, government authorities
Legal requirements No legal requirements

 

Legal reporting requirements by government and other authorities
Time period covered Historical and future information

 

Only historical information
Reporting formats

 

No specific formats Specific formats e.g. SFP, SCI
 

Nature of reporting

 

Planning , control and decision making issues aid to management in both  financial and non-financial terms

 

 

Performance analysis of organization over specific period of time mostly in financial terms

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