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Q2. Distinguish between management accounting and financial accounting. |

| Financial Accounting| Management Accounting|
Format:| Financial accounts are supposed to be in accordance with a specific format by IAS so that financial accounts of different organizations can be easily compared.| No specific format is designed for management accounting systems.| Planning and control:| Financial accounting helps in making investment decision, in credit rating.| Management Accounting helps management to record, plan and control activities to aid decision-making process.| External Vs. Internal:| A financial accounting system produces information that is used by parties external to the organization, such as shareholders, bank and creditors.| A management accounting system produces information that is used within an organization, by managers and employees.| Focus:| Financial accounting focuses on history.| Management accounting focuses on future.| Users:| Financial accounting reports are primarily used by external users, such as shareholders, bank and creditors.| Management accounting reports are exclusively used by internal users viz. managers and employees.| department:| preparing financial accounting is the work of finance department.| managerial accounting is not specific task of particular department. co-ordiantion of all department creates management accounting.| report frequency:| well defined - annually, semi-annually| whenever needed - daily, weekly, monthly.| Mandatory Vs. optional:| Preparing financial accounting reports are mandatory especially for limited companies.| There are no legal requirements to prepare reports on management accounting.| Time span:| Financial accounting statements are required to be produced for the period of 12 months.| No specific time span is fixed for producing financial statements.| Monetary Vs. non-monetary:| Most financial accounting information is of a monetary nature.| Management...
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