Major Differences between Financial Accounting and Managerial Accounting

MajorDifferences between Financial Accounting and Managerial Accounting

[StudentName]

[InstitutionalAffiliation]

MajorDifferences between Financial Accounting and Managerial Accounting

Whilefinancial accounting is aimed at delivering the financial health of acompany to external stakeholders and potential investors, managerialaccounting is focused on delivering financial information to companymanagers so that they can evaluate, plan and control the variousmethods used to utilize a company’s resources. Financial accountingis always factual and highly accurate and follows the generallyaccepted accounting principles. On the other hand, managerialaccounting does not follow any specific guidelines and is often madeup of estimates because most managers will lack adequate time toreview exact numbers when a decision needs to be made quickly.Therefore, financial accounting can be viewed as a scorecard used tojudge a company’s financial performance while managerial accountingcan be viewed as a guideline used to provide essential data tomanagers to aid them in decision making (Weygandt, Kimmel, &ampKieso, 2015).

Financialaccounting reports provide concrete information about anorganization’s current financial status, past financial mistakesand the various achievements that the company has made financially.This information sheds light on a company’s past and presentfinancial activities and is therefore used by stakeholders, creditorsor tax professionals to assess a company’s performance. The factsprovided by financial accounting reports also guide the public on theactual solidity of a company. On the other hand, managerialaccounting reports provide managers with information about financialprojections concerning the various departments, products or customersof a company. Since managers are always concerned about a company’sfuture, managerial accounting reports help them to plan aheadfinancially and to think of the various ways a company can grow basedon the estimates and projections that were provided (Weygandt et.al., 2015)

References

Weygandt,J.J., Kimmel, P.D., &amp Kieso, D.E. (2015). Comparing Managerialand Financial Accounting, Financial&amp Managerial Accounting(pp. 712-713). Retrieved fromhttps://books.google.com/books?id=pTExBgAAQBAJ&ampprintsec=frontcover#v=onepage&ampq&ampf=false