FINANCIAL ACCOUNTING

V/s
MANAGEMENT ACCOUNTING

Dr. Himanshu Jain, PIET

Dr. Himanshu Jain, PIET

 Main Branches of Accounting

1 2 3
Financial Cost Management
Accounting Accounting Accounting
Here Add Some Here Add Some
Own Text of Yours Own Text of Yours

Dr. Himanshu Jain, PIET

 Financial Accounting

Financial Accounting is an accounting system which is concerned with the

preparation of financial statement for the outside parties like creditors,
shareholders, investors, suppliers, lenders, customers, etc.
Financial Accounting has objective:
1. To ascertain the profitability of the business (Profit & Loss Accounts), and
2. To know the financial position of the concern (Balance Sheet).

Dr. Himanshu Jain, PIET

 Management Accounting

Management Accounting is comprised of two words ‘Management’ and

‘Accounting’. It means the study of managerial aspect of accounting.

In other words, Management Accounting means, accounting which provides

necessary information to the management for discharging its functions.

It is an extension of the horizon of cost accounting towards newer areas of

management.

Dr. Himanshu Jain, PIET

 Cost Accounting

It is a method of accounting for cost. The process of recording and

accounting for all the elements of cost is called cost accounting.

Cost accounting was born to fulfill the needs of manufacturing companies. It

is a mechanism of accounting through which costs of goods or services are
ascertained and controlled for different purposes.

Dr. Himanshu Jain, PIET

 Financial Accounting V/s Management Accounting

BASIS FOR
FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING
COMPARISON
Meaning Financial Accounting is an The accounting system which provides
accounting system that focuses on relevant information to the managers
the preparation of financial to make policies, plans and strategies
statement of an organization to for running the business effectively is
provide the financial information to known as Management Accounting.
the interested parties.
Is is Yes No
compulsory?
Information Monetary information only. Monetary and non-monetary
information
Dr. Himanshu Jain, PIET
 Financial Accounting V/s Management Accounting

BASIS FOR
FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTING
COMPARISON
Objective To provide financial information to outsiders. To assist the management in planning and
decision making process by providing detailed
information on various matters.
Format Specified Not specified
Time Frame Financial Statements are prepared at the end The reports are prepared as per the need and
of the accounting period which is usually one requirements of the organization.
year.
User Internal and external parties Only internal management.
Reports Summarized Reports about the financial Complete and Detailed reports regarding
position of the organization various information.
Publishing Required to be published and audited by Neither published nor audited by statutory
and auditing statutory auditors auditors.
Dr. Himanshu Jain, PIET
 Similarities between FA & MA

01 Used by the Internal Management

02 Evaluation of Performance

03 Branch of Accounting
04 Presents the position of the entity

Dr. Himanshu Jain, PIET