Difference between financial management and financial accounting?

Answer 1

The differences between management accounting and financial accounting include:

1. Management accounting provides information to people within an organization while financial accounting is mainly for those outside it, such as shareholders
2. Financial accounting is required by law while management accounting is not. Specific standards and formats may be required for statutory accounts such as in the I.A.S International Accounting Standard within Europe.
3. Financial accounting covers the entire organization while management accounting may be concerned with particular products or cost centres.

Managerial accounting is used primarily by those within a company or organization. Reports can be generated for any period of time such as daily, weekly or monthly. Reports are considered to be "future looking" and have forecasting value to those within the company.

Financial accounting is used primarily by those outside of a company or organization. Financial reports are usually created for a set period of time, such as a fiscal year or period. Financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company. 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. Such reports may include:

• Sales Forecasting reports
• Budget analysis and comparative analysis
• Feasibility studies
• Merger and consolidation reports

Financial Accounting, on the other hand, concentrates on the production of financial reports, including the basic reporting requirements of profitability, liquidity, solvency and stability. Reports of this nature can be accessed by internal and external users such as the shareholders, the banks and the creditors.

Answer 2

Financial accounting refers to the aggregation of accounting information into financial statements while financial management refers to the internal processes used to account for business transactions.

Answer 3

Management Accounting (MA) deals with non financial and a bit financial accounting. MA is very internal and it looks at the costs of production, how costs should be allocated, using labour hours, what costing method should we use, activity based costing or full cost costing.

Financial accounting (FA) looks at financial information only. Like profit, sales, gross profit, and cost of sales. FA has accounting standards to follow like the International Accounting Standards (IAS). Whilst the MA can be presented in any form.

FA is usually to communicate to the External Stakeholders (Govt, Owners, Customer, Banks etc..) and MA is usually for Internal Stakeholders (Employees, Managers, CEOs)

Answer 4

We might have heard both the terms in accounting scenarios like financial accounting, and management accounting. Although, both are the branches of accounting it may differ based on it’s definition and scope. Most of them are confused in these terms and the differences between it. Before entering in detail you must find what is accounting, and why do you need to keep your accounting books?. In general, accounting refers to the process of maintaining records of all financial transactions that have taken place within a business.

Accounting services are one of the important components that demands expert support and guidance. VBV & Associates is the best Accounting Firm in Kochi, Kerala offers all the financial solutions to your business.

Answer 5

Financial accounting is focused on managing the company's general accounts. Management accounting is for internal purposes only; and is helpful for planning.