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What's the difference between financial accounting and management accounting?

I am interested in this and am a little confused with the research I have done. #accounting

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Aman’s Answer

Managerial accounting is usually accounting meant for internal functions of an organization. They usually adhere to a different set of standards and rules that are specific to internal use. Financial accounting is more for th external use, think stockholders and creditors. Financial accounting has a heavy emphasis on accounting in a manner that fairly represents a company to others.

This article goes more in depth on the differences, but should help you understand a little further. http://smallbusiness.chron.com/management-accounting-vs-financial-accounting-3987.html
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Amr’s Answer

Agree with Aman as well.


Financial accounting is used to report the historical performance (Financial statements of the last year) of the company to the shareholders and other external users.

Management accounting is used to forecast information and patterns to help management make decisions (Internal users).

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Aloysius’s Answer

Hi Amit, hope you are clearer now with all the good responses you've received thus far. From a formal education perspective the definition and utility of Financial Accounting is for a business or Enterprise to report on their Financial performance (Balance Sheet, Income Statement, Cashflow Statement) as is a regulatory requirements per the country/ies they operate in. Management Accounting on the other hand uses the same foundations of Financial Accounting but help them to make business decisions to further improve their bottomline.
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Shea’s Answer

I agree with Aman. I do want to add on to what Aman said.

When you go to college you will get exposure to both of these in the accounting programs - both management and financial accounting classes will be required. I took accounting classes both at a community college and a university and was exposed to both throughout the programs.

I would also tell you that the concepts of management accounting and financial accounting will overlap throughout your career!
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Mina’s Answer

The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.
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