Managerial Accounting Essay

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Financial accounting is the part of accounting that is interested in the summary, consistent analysis and reporting of a financial transaction such as income statement, et al. that pertains to the company, which will be sent out to the public. Whereas, management accounting involves identifying, recording, measuring, interpreting and transferring financial and nonfinancial information for the purpose of making vital short-term decisions within the organization.
In addition, the characteristics of financial accounting involve external users, specific rules that need to comply with the U. S. General Accepted Accounting Principles, focus on historical financial information, details given are in summarize form and its performance is primarily financial. Meanwhile, the characteristics of managerial accounting involve internal users, no specific rules to follow, concern with the future projection and very detailed financial information for a particular segment of the company, and finally, its performance is based on both financial and non-financial measures. (Heisinger & Hoyle, 2012, p. 6) …show more content…

The reports prepared needs to follow certain accounting rules and also comply with the United States Generally Accepted Accounting Principles. On the other hand, managerial accounting focuses on preparing a very detailed future financial and non-financial information that is used by the internal bodies of the organization such as the executive, sales and product managers and so on and so forth in order to run the company effectively. The financial information prepared in managerial accounting does not follow any specific rule neither does it need to conform to the U.S. GAAP. (Heisinger & Hoyle, 2012, p.

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