3.management accounting vs financial accounting
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Financial accounting records historical transactions to assess financial position and profit/loss, provides information to external users, follows accounting principles, and results are published. Management accounting helps management formulate policies and plans using both monetary and non-monetary data, provides quicker internal reporting not governed by strict principles, and is not audited or published. Key differences are financial accounting focuses on historical data for external reporting while management accounting uses approximate future-oriented data for internal management decision making.
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3.management accounting vs financial accounting
- 1. FINANCIAL ACCOUNTING vs. MANAGEMENT ACCOUNTING Under guidance of: Dr. Shashi Srivastava Presented By: Prashant kumar Roll no. 40
- 2. 1 OBJECT. - The object of financial accounting is to record various transactions with the purpose maintaining accounts and to know the financial position and to find out profit loss at the end of the financial Year these records are useful to shareholders, creditors, bankers, debenture holders, etc. Management accounting is essential to help management in formulating policies and plans.
- 3. 2. NATURE. - Financial accounting is mainly concerned with the historical data. it records only those transactions which have already taken place. Management accounting deals with projection of data for the future. 3. SUBJECT-MATTER. - Financial accounting is concerned with assessing the results of the whole business. While management accounting deals separately with different unit, department and cost centers.
- 4. 4 .COMPULSION.-The preparation of financial accounts is compulsory in certain undertakings while these are a necessity in other. Management accounting is not compulsory. It is only a service function and is helpful to the management in administration of the business. 5. PRESISION. - In management accounting no emphasis is given to actual figures. The approximate figures are considered more useful then the exact figures. In financial accounting only actual figures are recorded and there is no room for using approximate figures. The transactions are recorded only when they have taken place so exact figures are used.
- 5. 6. REPORTING. - Financial accounting are prepared to find out profitability and financial position of the concern. Management accounting reports are meant for internal use only. These are prepared for the benefit of different levels of management. 7. DESCRIPTION. - Only those things are recorded in financial accounting which can be measured in monetary terms. Anything which cannot be recorded in figures is outside the scope of financial accounting. Management accounting uses both monetary and non- monetary events.
- 6. 8. QUICKNESS.- Reporting of management accounting is very quick. Financial accounting is slow and time consuming . 9. ACCOUNTING PRINCIPLES. - financial accounting are governed by the generally accepted principles and conventions. No set principles are followed in management accounting
- 7. 10. PERIOD. - Financial accounting are prepared for a particular period. Profit and loss account is generally prepared for one year. Management accounting supplies information from time to during the whole year. 11. PUBLICATION. - Financial accounting like profit and loss account and balance sheet are published for the benefit of public. Management accounting statements are prepared for benefit of the management only and these are not published.
- 8. 12. AUDIT. - Financial accounts can be got audited. Under company law, auditing of financial accounts is compulsory. Management accounting cannot be audited.