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Financial Accounting
Managerial accounting and financial accounting are two of the most prominent branches of accounting.
They both deal with processing information which is useful in decision-making; however, they have
differences that distinguish them from each other.
Managerial accountingprocesses economic information to be used by management in making
decisions.
Financial accounting involves the preparation of general-purpose financial statements used by various
users in making informed decisions.
The differences between managerial accounting and financial accounting can be summarized according
to the following bases of comparison:
Financial
Accounting
Management
Accounting
1. Users
Internal
Required
Not required
with accounting
standards
standards.
3. Time
Historical
orientation
4. Emphasis
information
5. Necessity
Mandatory
Optional
6. Purpose of
General-purpose
Special-purpose
reports
of its users.
or concern.
7. Details of
Concise
More detailed
reports
8. Sources of
data
9. Frequency of
reports
There have been arguments as to which between financial accounting and managerial accounting is
more important. However, it is somewhat pointless to argue on which is more important. Each has its own
purpose in the business environment.