What's the difference between management accounting & financial accounting?
Managerial accounting focuses on internal reporting and strategies and problem solving for profitability and long term business success. While a financial accountant is tasked with a more structured, external focus carrying out accurate historical financial recording and reporting.
Distinctions include role objectives, time frames, and legal requirements, find out more about the differences between management accounting and financial accounting.
What is management accounting?
A management accountant:
- Examines various ways to enhance profitability of the business through operational strategies.
- Carries out a variety of operational reporting for internal use.
- Takes a targeted approach to various areas of the business such as a single product or service profitability.
- Focuses on ongoing accounting and business practices throughout the year.
- Can be more general, dealing with estimates and expected projections guided by past performance rather than hard financial data.
- Concentrates on future financial expectations and goals.
- Can customise reporting and accounting practices to the relevant business.
- Performs strategic planning consisting of useful information and data to guide business goal setting practices.
- Creates highly detailed reports on specific aspects of the business.
What is financial accounting?
A financial accountant:
- Performs financial reporting for internal and external regulatory parties, investors, or shareholders.
- Provides an overall financial view of the business.
- Is focussed on end of year financial reporting and statements.
- Is required to maintain meticulous financial recording and reporting systems.
- Records in detail the actual financial situation of the business for the last year or financial reporting period.
- Must legally adhere to relevant financial and taxation reporting requirements.
- Monitors the business financial health and performance.
- Is required to produce standard financial reports such as profit and loss, cash flow statements, balance sheets, etc.
Does your Sunshine Coast business need accounting assistance? Schedule a consultation with our experienced business accounting team at 07 5471 7077 or using our online accountant booking form today.
References:
https://www.fool.com/the-blueprint/managerial-accounting-vs-financial-accounting/
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