Difference between Financial Accounting and Management accounting

1. Purpose

– Financial Accounting: Provides historical financial information to external stakeholders. – Management Accounting: Supports internal decision-making and planning.

2. Reporting

– Financial Accounting: Produces standardized financial statements for external audiences. – Management Accounting: Generates custom reports and analyses for internal use.

3. Time Horizon

– Financial Accounting: Focuses on the past, reporting on historical performance. – Management Accounting: Focuses on the future, aiding in planning and forecasting.

4. Regulatory Requirements

– Financial Accounting: Governed by strict accounting standards and regulations. – Management Accounting: Not subject to standardized regulations, offering flexibility.

5. Users

– Financial Accounting: External stakeholders like investors, creditors, and regulators. – Management Accounting: Internal stakeholders, primarily management and decision-makers.

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