Monday, April 28, 2008

Differences Financial Managerial Accounting

Six Differences between Financial Accounting and Managerial Accounting:

1. Financial accounting statements are mainly used by external users. Managerial accounting reports are prepared for internal users.

2. Financial accounting data is objective and verifiable. Managerial accounting data should be relevant for decision making, even if it is not objective and verifiable.

3.Financial accounting summarizes past transactions. Managerial accounting has a strong emphasis on the future.

4. Financial accounting statements must conform to generally accepted accounting principles (GAAP). Managerial accounting is not required to follow GAAP.

5. Financial accounting is mandatory and required by outside parties such as the Securities and Exchange Commission (SEC) and tax authorities. Managerial accounting is not mandatory.

6. Financial accounting is concerned with reporting for a company as a whole. Managerial accounting focuses on segments of a company such as product lines, divisions, and departments.

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