Financial Accounting It is commonly termed as Accounting.
The American Institute of Certified Public Accountants defines Accounting as “an art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character, and interpreting the results thereof.”
Management Accounting is concerned with the use of Financial and Cost Accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions.
Difference between Management Accounting and Financial Accounting
Management Accounting is primarily based on the data available from Financial Accounting. while Financial Accounting is based on the
monetary transactions of the enterprise.
management accounting provides the necessary information to the management to assist them in the process of planning, controlling, performance evaluation, and decision making while financial accounting main focus is on recording and classifying monetary transactions in the books of accounts and preparation of financial statements at the end of every accounting period.
Reports prepared in Management Accounting are meant for management and as per management requirements while financial accounting Reports as per Financial Accounting are meant for the management as well as for shareholders and creditors of the concern.
in management, accounting Reports may contain both subjective and objective figures while financial accounting Reports should always be supported by relevant figures and emphasizes the objectivity of data.
in management accounting reports are not subject to statutory audit while financial accounting Reports are always subject to statutory audit.
management accounting It evaluates the sectional as well as the entire performance of the business while financial accounting ascertains evaluates and exhibits the financial strength of the whole business.