are There both similarities and differences between managerial and financial
accounting. First, each field of accounting deals with the economic events of a
business. Reporting the total cost of goods manufactured and sold is part of financial
accounting. In addition, both managerial and financial accounting requires that a
companys economic events be quantified and communicated to interested parties.
The difference between financial and managerial accounting include the following in
Financial Accounting and Managerial Accounting.
Financial Accounting
External
users: stockholders,
creditors, and
regulators.
Financial
statements.
Quarterly and
annually.
Generalpurpose.
Pertains to business
as a whole.
Highly aggregated
(condensed).
Limited to doubleentry
accounting and cost data.
Generally accepted
accounting principles.
Audit by CPA.
Primary Users
of Reports
Managerial Accounting
Internal users:
officers and
managers.
Types and
Frequency
of Reports
Purpose of
Reports
Content of
Reports
Verification
Process
Internal
reports.
As frequently
as needed.
Special-purpose decisions.
Pertains for
specific to
subunits of the
business.
Very detailed.
Extends
beyond doubleentry accounting to
any relevant data.
Standard is
relevance to
decisions.
No
independent audits.
Managerial accounting, also known as management accounting, is a field of accounting
that provides economic and financial information for managers and other internal users.
The activities that are part of managerial accounting include the some of following.
Explaining the financial statements in which the manufacturing and nonmanufacturing
costs occur. Calculating the price of supply of a service or manufacturing a product
within the company. Determining the actions of expenses, operating cost as activity
levels changes. Supporting management in proceeds development and formalizing
these plans in the form of budgets. Supply a basis for controlling expenditures and
expenses by evaluating actual results with planned objectives and standard costs.
Accumulating and presenting relevant data for management decision making.
Determining prices for external and internal dealings within the company.