Differences in Financial and Managerial Accounting

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There are quit a few differences in financial and managerial accounting, the first differences has to do with the primary users of the reports; in financial accounting the reports are used by external users such as stockholders, creditors and regulators. On the other hand managerial accounting reports are used by internal users and include officers and managers. In addition the type and the frequency of the reports differ; financial accounting have financial statements and quarterly and annually are for general purposes while managerial reports are independent and take place as often as needed and have a special purpose for specific decisions. Also, financial reports pertain to the business, as a whole are highly aggregated, limited to double entry accounting and cost data, and gave generally accepted accounting principles. This differs from managerial accounting, which contains information that pertains to subunits of the business, is very detailed, extend beyond double entry, and the standard is relevant to decisions. Lastly, CPA audits financial accounting reports and managerial accounting has no independent auditors (Weygandt, 2010).

The information produced by managerial accounts is in the form of sales forecast, budgets, variances reports and feasibility studies for potential expansion and other projects and is reported within the business. Management Accounting is the branch of Accounting that deals primarily with confidential financial reports for the exclusive use of top management within an organization. These reports are prepared utilizing scientific and statistical methods to arrive at certain monetary values, which are then used for decision-making. Financial accounting produces information about sales, profits, losses, and debts a business will report. This information is used to make decisions on loan approval, buying and selling stocks, and profit disbursing. Financial accounting is reported to government agencies that include the IRS and the...
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