Managerial and Financial Accounting

Managerial and Financial Accounting

Introduction
The role of accounting information in making economic decisions is imperative. Management Accounting and Financial Accounting are two different sources of information which report different information to different users. This paper will discuss what type of information each one provides, who the users are of such information, and what kind of business decisions can be made with this information.
Managerial Accounting
The purpose of managerial accounting is to provide information to managers or those who are inside an organization and who direct and control its operationsn so that they make informed business decisions that will allow them to be better equipped in their management and control functions. Managerial accounting is different from financial accounting since financial accounting is concerned with providing information to stockholders, creditors and others who are outside an organization.
Managerial accounting information includes information on the costs of an organization’s products and services. These product costs can be used by managers for inventory purposes and income determination. Managerial accounting information also include budgets, performance reports and other information that assist managers in their planning and control activities such as unit quantities and demands on capacity resources.
In contrast to financial accountancy information, management accounting information is usually confidential and used by management, instead of publicly reported; forward-looking, instead of historical and pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards. Management accounting information is used within an organization, typically for decision-making.
Financial Accounting

Financial accounting is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks,...