Question

In my Accounting class we are being asked to respond to/comment on different things that students post. My professor is requiring a "substantive" response with references to back up what is being said. I need some help with a response to this post. Any help you can give me will be GREATLY appreciated!

Financial accounting is found when draw up financial statements used as a end of term form of accounting like when a person gets their bank statement or balance sheets. Managerial accounting is more real time accounting see what is done by each transaction. Like with restaurants having to keep up to date books each day showing what was sold and what ingredients may be needed to be purchased for the next day or wee. For my current job I have to use a mixture of both. With it being end of fiscal year every transaction is being monitored to make sure all money will be spent before the end of the year. Then with information for the total year the budget will be made for next year with preset guidance of how each month should look for general services.

Answer 1

Financial accounting and Managerial accounting are not the same. They differ on below points-

	Financial Accounting	Management Accounting
Purpose of Reporting	• Deals with reporting to parties outside the organization	• Deals with activities inside an organization
Scope	• Deals with the organization as a whole	• Deals within the different departments as well as with the organization as a whole
Regulations/ Standards and Practices	• Highly regulated	• Unregulated
Data Required	• Primarily uses historical data	• May use projections about the future
Time Interval	• Time dimension and Report frequency	• Requires details of expected future costs and revenues and may be prepared at daily,weekly or monthly intervals.
Other Points	• Money Measurement Concept	• Quantitative and qualitative information

Budgets are prepared to have an idea of how the company/department shall set standards/benchmarks for future. They are prepared to vouch how the company shall perform in short term and long term and to exercise controls when actuals vary from budgets.

Budgets are prepared on the basis of detailed financial balance sheets, income statements and cash flows. Managerial accounting data can be used for creation of budgets in areas which are volatile/subject to change and where discretion applied shall have a better outcome than normally following the trend observed in financial data.

Financial Accounting is practiced to meet the requirements of the stakeholders and authorities. Managerial Accounting is practiced in a more informal manner for their own requirements to plan their internal activities.