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The document compares and contrasts financial accounting and managerial accounting. Financial accounting provides information to outsiders such as stockholders and creditors by reporting on past performance according to generally accepted accounting principles (GAAP). Managerial accountants prepare a variety of internal reports for managers focusing on performance comparisons, key indicators, and analytical reports to investigate issues or opportunities. Financial accounting emphasizes objectivity and precision in summarized reports for external users, while managerial accounting emphasizes relevance and timeliness of detailed segment reports to aid with planning, directing, and decision making internally.

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Zafar Hameed Gajizai
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19 views

Assignment No

The document compares and contrasts financial accounting and managerial accounting. Financial accounting provides information to outsiders such as stockholders and creditors by reporting on past performance according to generally accepted accounting principles (GAAP). Managerial accountants prepare a variety of internal reports for managers focusing on performance comparisons, key indicators, and analytical reports to investigate issues or opportunities. Financial accounting emphasizes objectivity and precision in summarized reports for external users, while managerial accounting emphasizes relevance and timeliness of detailed segment reports to aid with planning, directing, and decision making internally.

Uploaded by

Zafar Hameed Gajizai
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT NO-1 MANAGERIAL ACCOUNTING

21/03/2011

Difference Between Managerial And financial Accounting Financial Accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Financial accounting provides the scored by which a company's overall past performance is judged by outsiders. Managerial accountants prepare a variety of reports. Some reports focus on how well managers or business units have performedcomparing actual results to plans and to benchmarks. Some reports provide timely, frequent updates on key indicators such as orders received, order backlog, capacity utilization, and sales. Other analytical reports are prepared as needed to investigate specific problems such as a decline in the profitability of a product line. And yet other reports analyze a developing business situation or opportunity. In contrast, financial accounting is oriented toward producing a limited set of specific prescribed annual and quarterly financial statements in accordance with generally accepted accounting principles (GAAP).

Financial Accounting
Reports to those outside the organization owners, lenders, tax authorities and regulators. Emphasis is on summaries of financial consequences of past activities. Objectivity and verifiability of data are emphasized. Precision of information is required. Only summarized data for the entire organization is prepared. Must follow Generally Accepted Accounting Principles (GAAP). Mandatory for external reports.

Managerial Accounting
Reports to those inside the organization for planning, directing and motivating, controlling and performance evaluation. Emphasis is on decisions affecting the future. Relevance of items relating to decision making is emphasized. Timeliness of information is required. Detailed segment reports about departments, products, customers, and employees are prepared. Need not follow Generally Accepted Accounting Principles (GAAP). Not mandatory.

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