The Differences in Financial and Managerial Accounting
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What are the differences between financial and managerial accounting? Who are the primary users? What is the difference in purpose and content of the reports?
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Solution Summary
This response compares financial and managerial accounting and contrasts the purposes, users, and contents of each report.
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The purpose of accounting is to provide the necessary information that is needed to make sound economic decisions.
Financial Accounting: The main purpose of financial accounting, a subset of the science of accounting, is to prepare necessary financial reports about a firm's financial performance for interested outside parties such as investors, lenders, creditors, analysts, tax, and other governmental regulatory agencies.
In order that companies report their financial performance fairly and consistently, they must be prepared according to Generally Accepted Accounting Principles (GAAP). Under the auspices of the Financial Accounting Services Board, and enforced by the power of the United States Security and Exchange Commission, GAAP provides accountants with certain assumptions, ...
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