See attached file for clarity.
Management accounting differs from financial accounting in many ways. Indicate with an "X" in the appropriate column whether each of the following characteristics relates to financial accounting, management accounting, or neither.
Financial Accounting Management Accounting Neither
Owners, stockholders, lenders, customers, governmental agencies
Report Format and Frequency:
In conformance with GAAP whenever needed
Flexible, driven by user's needs
In conformance with GAAP on a periodic basis
Nature and Purpose of Reports:
Objective and verifiable; reports on past performance
Objective and verifiable for decision making; subjective for planning
Subjective and verifiable; reports on past performance
Units of Measure:
Dollars at historical, market, or projected values; physical measures of time or number of objects
Dollars at historical values only
Dollars at historical and market values
See attached file for the table.
Some discussion of basics:
Major differences are:
1) Financial Accounting is an art of recording, summarizing and interpreting the financial transactions of an organization. It provides us the financial statements such as balance sheet, income statement and cash flow statement.
Management accounting provides information to the management for decision making.
2) Management accounting gives the internal reports relating to the product/process/activity. Financial accounting gives external reports too.
3) Management accounting is internally focused as it reports ...
Response helps in differntiating characteristics as to financial accounting, management accounting