Difference Between Managerial Accounting and Financial Accounting
Managerial accounting vs financial accounting
Both professions are about counting money, but there is a big difference between managerial accounting and financial accounting. Accounting inside a company or the organization is called managerial accounting, while accounting outside of a company or an organization is called financial accounting. This is the main difference between the two, .
In managerial accounting, reports can be made daily, weekly, or monthly. The reports are very important because they can be used to predict the future outlook of the company, especially the company’s financial statement.
In contrast, financial accounting reports are done during a fiscal year or during a period. The financial reports have value when evaluating the past, present, and future and can help you make wise decisions when it comes to investing.
Managerial accountants do not disclose financial statements very easily. The reports are confidential, containing information that is only for the organization. That is because these reports can be used for sales forecasting reports, budget analysis and comparative analysis, feasibility studies, and merger and consolidation reports.
Compared to managerial accounting, financial accounting is more focused on the final reports. It can give the company a report on profitability, liquidity, solvency, and stability for the entire operation. Shareholders, banks, and creditors can be allowed to see the reports, because they are not confidential like reports from management accounting.
Financial accountancy can help in monitoring and describing the financial statement of the company, while managerial accountants can help companies make the right financial decision.
There is a standard-setting body all over the world that accountants should follow. However, the managerial accountant does not necessarily follow these rules, because he follows the rules made by the company he is in. Financial accountants, however, must follow these regulations religiously. International companies prefer managerial accountants who passed the CMA or certified management accountant certification.
Managerial accountancy and financial accountancy are two different types of accountancy, which is why these two professions have so many different attributes. Managerial accountant creates reports for the future outlook while the financial accountant bases his facts more on history. Managerial accountant has no timeline followed for financial statements while financial accountants should pass a statement after 12 months.
There are so many other differences between these two accountants. One is stricter while the other follows his own rule. But still somehow, they have some similarities, they both are accountants, the only difference is where they work and how they work there as an accountant.
The managerial accountant works in a company or organization, while the financial accountant does not.
Managerial accounting can help a company decide on the next financial step, while financial accounting is more about describing things.
Financial accountants submits a report periodically while managerial accountant may only pas weekly, daily or monthly.
Managerial accountancy follows the rules made by individual companies or organizations, while financial accountancy follow the regulations of the standard setting body all over the world.
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