Differences between Managerial and Financial Accounting

Question 1

Primary Users

Answer 1

Financial Accounting:

• External (investors, creditors)

Managerial Accounting:

• Internal (management)

Question 2

Purpose

Answer 2

Financial Accounting:

• Help external stakeholders in their decision making

Managerial Accounting:

• Help plan and control internal decisions

Question 3

Time Dimension

Answer 3

Financial Accounting:

• Focus on the past

Managerial Accounting:

• Focus on the future

Question 4

Frequency

Answer 4

Financial Accounting:

• Summary reports usually on a quarterly/yearly basis

Managerial Accounting:

• Detailed reports (prepared often on a daily or weekly basis

Question 5

Rules

Answer 5

Financial Accounting:

• Required to follow GAAP

Managerial Accounting:

• Not required to follow GAAP

Question 6

Emphasis

Answer 6

Financial Accounting:

• Adequacy of disclosed information

Managerial Accounting:

• Influencing behaviour