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Financial Accounting Designed to Supply Information in the Form Of

Financial Accounting Designed to Supply Information in the Form Of

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Published by Aayush Agnihotri

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Published by: Aayush Agnihotri on Oct 30, 2009
Copyright:Attribution Non-commercial

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12/07/2009

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S.No.Basis oDifferenceManagementAccountingFinancialAccounting
1.
Objectives
Designed for  providing accountinginformation for internal use by themanagement.Designed to supplyinformation in theform of P&LAccount and BalanceSheet to the externalusers likeshareholders,creditors, banks,investors andgovernment.2.
Analyzingperformance
Directs its attention tothe various divisions,departments andreports about the profitability etc. of each of them.Portrays the positionof business as awhole with the helpof financialstatements likeincome statement &Balance Sheet.3.
Focus on timeframe
Concerned with planning, strongfuture orientation.Concerned withreporting what hashappened in the past.4.
Flexibility withrespect toaccountingstandards
Enjoys the flexibilityin preparation basedon the specificrequirement andutility of themanagement.Prepared on the basisof GAAPs (GeneralAccepted AccountingPrinciples) since itcaters to the needs of outsiders.5.
Emphasis onprecision
Speed is often moreimportant than precision. Use goodestimates andapproximations.Events andtransactions arerecorded in precisevalues as theyactually occur.6.
Reference tonon-monetaryevents
Places considerableweight on non-monetary data alsolike time lost due to break-down, weather conditions, expectedentry of a competitor etc.Only monetarytransactions arerecorded.7.
Integration withother disciplines
Draws heavily fromother disciplines tohelp the managers inthe decision-making process.Basically a self-contained subject.

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