Management accounting vs. financial accounting
Management Accountants are well-trained business leaders who are able to design and implement integrated systems that provide the company with both financial and non-financial information, to ensure that the company runs smoothly.
Financial accountants present the company’s financial information to the external stakeholders. This is done so that external clients are able to see how the company has been performing. This is particularly useful for other businesses or entrepreneurs to decide whether they would like to invest in the company.
Scope of management accounting
The scope of management accounting is huge. Here are a few examples:
- Financial accounting: This is the most important part of accounting, because it provides the basic financial information that needs to be analysed in order to make good, calculated decisions.
- Cost accounting: This is one of the key branches of accounting, which concerns all the cost-related information within the organisation.
- Control accounting: Management accountants are highly dependent on the internal controlling system of a company, so that they are able to measure the difference between actual and standard results.
The importance of management accounting
The most important part of management accounting is to control the costs of the company.
Management accounting allows for stock assessments and profit measurements to take place, so that the financial reports can be drawn up. Anything that has been produced by the company needs to be evaluated and valued, and a record needs to be kept of everything. A managerial accountant may also have to create in-house financial and accounting structures. This assists accountants in providing more accurate predictions, and finding ways to increase profits or to reduce expenses.
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