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Difference between Financial Accounting and Management Accounting

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Difference between Financial Accounting and Management Accounting

Accounting is the language of business. The management and owner of business can understand the image of business more clear through accounting. It is divided into two types, financial accounting and management accounting.

First we’ll discuss the financial accounting. Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the details of transactions resulting from business operations over a period of time. This is useful for external as well as internal purposes and is implemented by law. Its format is standardized guided by IASB( International Accounting Standard Board). Normally, the financial reports are published yearly.

On the other hand, Managerial Accounting (also known as cost accounting or management accounting) is a branch of accounting that is concerned with the identification, measurement, analysis, and interpretation of accounting information so that it can be used to help managers make informed operational decisions. This is only for internal purpose and useful for management of business to grow the business. Unlike Financial Accounting, Management Accounting is not according to standard format, can be reported any time i.e. monthly, yearly, daily etc. Every organisation has own rules for Management Accounting

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