Comparison between the Management and Financial Accounting
Accounting is one of the most important fields in the corporate world in the present times. The two main fields of accounting that determine the success or failure of any organization are the management accounting and the financial accounting. There is a vast difference between the two fields as both of them to cater to the different segments dealing with the organization. The financial accounting is done for the people and agencies that are outside the purview of the company whereas the management accounting is done for the internal managers in order to enable them to take informed decisions concerning the organization. In the financial accounting the financial reports that are prepared by the accountants are meant for the outside agencies like the external audit committees, the tax audits, the investors, the banks, and also the individuals like the share holders.
The management accounting is done by the accountants in order to provide the financial reports to the internal managers as well as the other decision makers in the company so that they can take informed decisions for the company. Since the financial reports are meant only for the internal purposes therefore the management accountant is not at all answerable to any of the governing bodies like the GAAP. On the other hand the financial accountants of an organization are answerable to such accounting bodies.
On the basis of the reports that are prepared by the management accountants, the company takes its decisions regarding the future concerns of the organization. It is also important to note that the reports that are prepared by the management accountants go a long way in informing the management about the cost that they are bearing on the various projects of the company. The field of cost accounting also is a part of the management accounting and the financial reports that are prepared by the cost accountants informs that management about the processes that are proving to be beneficial and the ones that are not proving to be beneficial.