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Differences Between Management Accounting and Financial Accounting

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Differences Between Management Accounting and Financial Accounting

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MIDDLESEX UNIVERSITY

2008/2009

MODULE NUMBER ACC1130

MODULE TITLE Introduction to Managerial Finance

Coursework 1

STUDENT NAME…………………………..

STUDENT NO:…………………………...

SEMINAR TUTOR …………………………...

Introduction

Accounting is concerned with providing both financial and non-financial information that will help decision makers to make good decisions. An understanding of accounting therefore requires an understanding of the decision making process and an awareness of the users of accounting information. The major purposes of accounting are to formulate overall strategies and long-run plans. Resource allocation decisions such as product, pricing and customer emphasis. Cost planning and control of activities. The measuring of the performance of the company.[1]

The managing director at ABX Co does not understand the difference between financial accounting and management accounting; and therefore is finding it hard to understand why I have proposed the idea of having an assistant to concentrate on management accounting duties. I will be discussing below various elements as to what and how financial accounting and management accounting differ.

Differences between Financial accounting & Management accounting

Financial accounting and Management accounting both produce reports and statements, but it is to whom and when they start to differ. I will be discussing below the major differences between the two branches of accounting which are legal requirements, the focus of segments of the business, the accepted accounting principles and report frequency.

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. Management accounting data is only accessed and used by those internal to the business.[2]

Financial...