Week 1 - Financial vs Management Accounting Flashcards
What does financial accounting seek to do?
Meet the needs of owners and lenders
Who are financial statements for?
External users
Why do their need to be rules and regulations for financial statements?
They need to be standardised and in the correct format
What does management accounting seek to do?
Meet the accounting and decision-making needs of managers
Who are accounting reports for in management accounting?
Internal users
What are the rules/restrictions to adhere to for management accounting?
N/A - there are none
Who are some of the users that would want to look at financial statements?
Tax and government authorities, banks, investors and suppliers
What is management accounting focused on and how does this affect the detail level required?
It is focused on specific decision- making and the level of detail is therefore high
What is financial accounting focused on and how does this affect the detail level required?
A general overview and therefore the level of detail is less intense
How often do financial statements need to be prepared?
Annually or semi-annually - whenever rules and regulations state
How often do management accounting statements need to be prepared?
It depends on when the decision-making needs to occur - produced when required
What is the timeline of financial statements?
They are prepared to recap the past period of time and are therefore mainly historical
What is the timeline of management accounting statements?
They are prepared for future periods of time so can be historical and futuristic
What kind of information do financial statements hold?
Quantifiable figures that need to be verifiable
What kind of information do management accounting statements hold?
Both quantitative and qualitative information important for decision-making
