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    Distinguish between Financial and Management Accounting

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    Distinguish between financial accounting and managerial accounting as to user groups and time horizons.

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    Distinguish between financial accounting and managerial accounting as to user groups and time horizons.

    The primary role of accounting is to evaluate the performance of a business and convey this information to users, both external and internal. To achieve this end, accounting identifies, records, and communicates the economic events of an organization to interested users in the form of accounting reports. The interested users can be internal (management, others in value chain) or external (stockholders, creditors, other external parties).
    Users of accounting information:

    i) Management of a firm uses accounting information in planning, controlling, and evaluating business operations.

    ii) Stockholders use accounting data to decide whether to buy, hold, or sell their shares in a firm.

    iii) Creditors (which consist of suppliers to the firm which sell to the firm and bankers and bondholders who hold the debt of the firm) use accounting information to evaluate the risks of granting credit or lending money to the firm.
    iv) Others: There are other groups that use accounting information- taxing authorities (such as Internal ...

    Solution Summary

    The Solution compares financial and management accounting

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