Question

Accounting 1. What is the difference between financial accounting and managerial accounting? As the managet for a firm, which one will you be more concerned with and why?

Answer 1

Differences between financial accounting and managerial accounting-

1. In financial accounting, preparation of financial statements is made and reported is made after such preparation which is sent to interested parties or stakeholders. Where as in managerial accounting, preparation and conducting of business transactions is focused so as to make policies and procedures for the firm.

2. The purpose of financial accounting is to provide financial information. The purpose of managerial accounting is to make analysis and take business decisions.

3. The interested parties in financial management is both internal and external stakeholders. Where as in managerial accounting, only internal management is interested.

4. In financial accounting, only financial information is used. In managerial accounting, both financial and non financial information is used.

5. Financing accounting is done by Accountants and managerial accounting is done by managers.

As the manager for a firm, we are more concerned with managerial accounting, so as to take decisions for business based on report. But financial accounting cannot be ignored as both financial and managerial accounting both are interconnected. Financial reports assist the managers to make report based on managerial accounting. But as a manager, managerial accounting is more important.