What Is Finance and Management Accounting and How Do They Differ?

Accountant professionals are the ones who perform aws accounts sell tasks for a company or an individual. Accountants have a host of duties to perform like some of the accounts may deal in company’s financial statements, while others may work closely with organization’s management matters related to budgets, analysing the cost of the products, services and operations.

Some may work in auditing while others work as independent accountants like Certified Public Accountants (CPA’s), who carry out auditing for more than one company. An accountant can be regarded as a primary figure as they are required in every business, whether it is a multinational, small firm or self-owned business.

Accountancy is a vast field, which keeps on evolving. Over the past few years, accounting has expanded manifold, catering to the varied requirements of the businesses and has branched out in different types-

It is a process of determining, summarizing and reporting a number of transactions from a business to bring forth the correct financial situation and performance of an organization. This field primarily deals in preparation of financial statements in the form of balance sheets, income statements, expenses and record of cash flow. Financial accounting is carried out to present the financial health of an organization to its external stakeholders, Board of Directors, creditors and other investors. The reports are time specific in order to depict how the company has performed. In a nutshell, financial accounting caters to an audience which is outside an organization.

Managerial or management accounting is a field of accounting, which aims at providing financial information within the company in order to assist the managers or management in planning, controlling and decision-making. It does not use the past data; in fact it is based on the present performance, future trends and challenges. The information/report produced is usually more particularized in comparison to external usage. This is done so as to enhance and optimize matters related to finance thus aiding in the accomplishment of the company’s goals and objectives.

The primary difference between both the types of accounting is quite evident, that management accounting is presented internally whereas financial accounting caters to external stakeholders. Both have significant importance of their own position. Financial is vital for existing and potential investors, while management is crucial for managers to make current and future decisions.