What are the key differences between financial accounting and management accounting?
Management accounting as the name suggests is accounting for managing things by the managers whose primary task involves implementation of objectives with less of time , energy and cost. Hence managerial accounting measures , analyses and report financial and non-financial information that helps managers make decisions to fulfill the goals of an organization.
Financial accounting focuses on reporting to external parties such as investors, government , agencies , banks and suppliers.
Management accounting is internal whereas financial is external.
Management accounting measures and reports based on cost benefit analysis ,they don't have to follow GAPP whereas Financial accounting must be prepared in accordance of GAPP.
Managerial reports are financial and non financial on products, departments, territories and strategies whereas financial report on company as a whole
Managerial reports can be hour based on may be 10-15 years whereas financial reports as either quarterly or yearly.
Financial accounting is required by law, while managerial accounting addresses a company's interior financial decision making processes.
Financial accounting reports are requested by outside stakeholders of a company (legal authorities, tax regulators, investors, stock holders, etc), while managerial accounting reports are the focus of departments inside a company.
The key difference between financial accounting reports and managerial accounting reports is that the first type of report gives specific details about the status of a company's financial activities, while the second type of report is focused toward decisions made inside a company regarding future financial activities.
You should note that the similarity between financial and managerial accounting is that both create reports based on fundamental financial data.