Different Financial Account and Management Account
COMA (Chartered Institute of Management Accountants) defines Management accounting as “Management Accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that used by management to plan, evaluate, and control within an entity and to assure appropriate use of an accountability for its resources”.
Financial accounting is concerned with providing information of the scorecard by which a company’s past performance to External user (Ex: stockholder, creditor, and shareholder) I Financial Accounting I Management Accounting I Format I accordance with a specific format by SIS I No specific format I Objectives I l) to disclose the end results of the businesses) to disclose the financial condition of the business on a particular date I help management by providing Information that used by management to plan, evaluate, and control I
Planning and control I helps in making Investment decision, In credit rating I helps management to record, plan and control activities to aid decision-making process I Accounting process I Follows a full process of recording, classifying, and summarizing for the purpose of analysis and interpretation of the financial information I Cost accounts are not preserved under Management Accounting but analyses necessary data from financial statements and cost ledgers.
I Legal/rules I Drafted according to GAP – General Accepted Accounting Procedure. I Drafted according to management suitability. I Users I External users, such as shareholders, bank and creditors. I Internal users such as managers and employees. I Mandatory Vs.. Optional I Preparing financial accounting reports are mandatory especially for limited companies I There are no legal requirements to prepare reports on management accounting report frequency I annually, seem- annually I whenever needed ; daily, weekly, monthly.
I Focus I history I future I Importance I The financial accounting, the origin of preservation of knowledge ivies emphasis on recording keeping on a whole firm basis for the purpose of decisions by all the users of accounting information, both external and internal. Management accounting uses cost data for provision of information for strategic management decisions. It is mainly concerned with the provision of help to the managers to asses them in the process of decision making and design business strategies. I The deferent between Financial Accounting and Management accounting: IQ .
