Difference between Management and Financial accounting Management Accounting Financial AccountingInformation usually/mainly produced for Internal use e.g. managers and employees External use e.g. stake holder, payable, lender, banks, government etc.Purpose of Information To aid planning, controlling and decision making. To record the financial performance in the period and the position at the end of that period.Legal Requirement None Limited companies must provide financial accountsFormats Management decide on the information they require and most useful way of presenting it. Formats and contents of financial accounts intended to give true and fair view, should follow accounting standards and company law.Nature of information Financial and Non- financial Mostly financial Time period Historical and forward working Mainly a historical researchExplain this in detail by making table and please use easy wording because i am not good in English and also give each example
Question
Difference between Management and Financial accounting Management Accounting Financial AccountingInformation usually/mainly produced for Internal use e.g. managers and employees External use e.g. stake holder, payable, lender, banks, government etc.Purpose of Information To aid planning, controlling and decision making. To record the financial performance in the period and the position at the end of that period.Legal Requirement None Limited companies must provide financial accountsFormats Management decide on the information they require and most useful way of presenting it. Formats and contents of financial accounts intended to give true and fair view, should follow accounting standards and company law.Nature of information Financial and Non- financial Mostly financial Time period Historical and forward working Mainly a historical researchExplain this in detail by making table and please use easy wording because i am not good in English and also give each example
Solution
Sure, here is a simplified explanation of the differences between Management Accounting and Financial Accounting:
| Management Accounting | Financial Accounting | |
|---|---|---|
| Who uses the information? | This is used by people inside the company, like managers and employees. | This is used by people outside the company, like stakeholders, lenders, banks, and the government. |
| Why is the information used? | This information helps with planning, controlling, and making decisions. | This information is used to record how well the company did financially during a certain period and what the company's financial position was at the end of that period. |
| Is it legally required? | No, there is no legal requirement for management accounting. | Yes, limited companies must provide financial accounts. |
| What is the format? | The managers decide what information they need and the best way to present it. | The format and contents of financial accounts should give a true and fair view, and should follow accounting standards and company law. |
| What type of information is it? | This can be financial and non-financial information. | This is mostly financial information. |
| What time period does it cover? | This can cover past information and also make predictions about the future. | This mainly looks at past information. |
For example, in Management Accounting, a manager might use information about the cost of materials and labor to decide how much of a product to make. In Financial Accounting, a bank might look at a company's financial accounts to decide whether to give the company a loan.
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