What is the difference between financial accounting and managerial accounting?
Managerial accounting is for internal users (those directly
involved in managing and operating and organization), while
financial accounting is for external users (those indirectly
involved in running an organization).
Management (or managerial) accounting is used for internal business
purposes. It includes lots of estimates and projections. It can be
very informal, if the managers so desire. It is used by people
inside the company to make decisions about the direction of the
Financial accounting is for external users. It must be prepared
following standards laid out in GAAP (for US companies) or a
foreign equivalent. External users, such as investors, creditors,
suppliers, and customers use financial accounting information to
make decisions related to the company in question.