Different Financial Account and Management Account
Q1. Management accounting is a field of accounting, it analyses and provide cost information to internal user (Ex: employee, management) for the purpose of PLANNING, CONTROLLING, and DECISION MAKING.
P.S. CIMA (Chartered Institute of Management Accountants) defines Management accounting as “Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that used by management to plan, evaluate, and control within an entity and to assure appropriate use of an accountability for its resources”.
Financial accounting is concerned with providing information of the scorecard by which a company’s past performance to External user (Ex: stockholder, creditor, and shareholder) | Financial Accounting | Management Accounting | Format | accordance with a specific format by IAS | No specific format | Objectives | i) to disclose the end results of the businessii) to disclose the financial condition of the business on a particular date | help management by providing information that used by management to plan, evaluate, and control | Planning and control | helps in making investment decision, in credit rating | helps management to record, plan and control activities to aid decision-making process | Accounting process | Follows a full process of recording, classifying, and summarising for the purpose of analysis and interpretation of the financial information | Cost accounts are not preserved under Management Accounting but analyses necessary data from financial statements and cost ledgers. | Legal/rules | Drafted according to GAAP - General Accepted Accounting Procedure. | Drafted according to management suitability. | Users | External users, such as shareholders, bank and creditors. | Internal users such as managers and employees. | Mandatory Vs. optional | Preparing financial accounting reports are mandatory especially for limited companies | There are no legal
P.S. CIMA (Chartered Institute of Management Accountants) defines Management accounting as “Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that used by management to plan, evaluate, and control within an entity and to assure appropriate use of an accountability for its resources”.
Financial accounting is concerned with providing information of the scorecard by which a company’s past performance to External user (Ex: stockholder, creditor, and shareholder) | Financial Accounting | Management Accounting | Format | accordance with a specific format by IAS | No specific format | Objectives | i) to disclose the end results of the businessii) to disclose the financial condition of the business on a particular date | help management by providing information that used by management to plan, evaluate, and control | Planning and control | helps in making investment decision, in credit rating | helps management to record, plan and control activities to aid decision-making process | Accounting process | Follows a full process of recording, classifying, and summarising for the purpose of analysis and interpretation of the financial information | Cost accounts are not preserved under Management Accounting but analyses necessary data from financial statements and cost ledgers. | Legal/rules | Drafted according to GAAP - General Accepted Accounting Procedure. | Drafted according to management suitability. | Users | External users, such as shareholders, bank and creditors. | Internal users such as managers and employees. | Mandatory Vs. optional | Preparing financial accounting reports are mandatory especially for limited companies | There are no legal