Difference between management accounting and financial accounting

Following are the basic difference between management accounting and financial accounting.

Basis of difference Cost & Management Accounting Financial Accounting
Users Internal users External Users
Restriction on inputs and processes It is not subject to the Restriction on inputs requirements of generally accepted accounting principles. The inputs and processes of financial accounting are well defined and in fact, restricted.
Types of information In cost & management accounting information may be financial or non-financial and may be much more subjective in nature The restriction imposed by financial accounting tend to produce objective and verifiable financial information.
Timing Although cost & management accounting also records and reports events that have already occurred, there is also a very strong emphasis on providing information about future events Financial accounting has a historical orientation. It records and reports events that have already happened.
Performance Cost & management accounting provides measures and internal reports used to evaluate the performance of entities, product lines, departments and managers. Essentially very detailed information is needed and provided. Financial accounting focuses on overall firm performance, providing a more aggregated viewpoint.
Breadth Cost & management accounting is much broader than financial accounting. It includes aspects of managerial economics, industrial engineering and management science, as well as numerous other areas. Financial account is less broader as compared to management accounting.

 

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