Financial vs Management Accounting
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Financial vs Management Accounting
Financial accounting is concerned with the past performance of a business. The reports should allow the business to compare against previous years and also other similar businesses. Additionally, financial accounting gives a view of the business without the bias of management. This can also be known as an objective view. And finally the financial accounting reports are provided to good quality and should give comfort as they follow the accounting standards. On the other hand, management accounting is concerned with the future performance of a business. This can be assessed through planning and also budgeting. Management accounting can help in the following ways. Firstly it could help forecast sales of different products and also estimate the profits or losses on a business level or by product. Management accounting could also help assess whether it adds value or not to expand and finally could evaluate the expected demand depending on the selling price of a product.
