Compare and Contrast Financial and Managerial Accounting

Compare and Contrast Financial and Managerial Accounting
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Compare and Contrast Financial and Managerial Accounting
Financial accounting is a discipline in the accounting field that embarks in recording and reporting transactions in an enterprise. Financial accounting's objectives are to keep financial records necessary for the preparation of income statements and balance sheets (Deegan, 2013). Additionally, it also helps in evaluating performance in a company for a particular period. On the contrary managerial accounting is the practice of measuring, interpreting, and analyzing financial information to help executives or managers strategize on ways of meeting the needs of an organization (Braun, Beaubien & Tietz, 2017). Financial accounting typically indulges in providing relevant information for financial statement preparation, while managerial accounting helps in an organization's internal management.
The Importance of Managerial Accounting to Managers
Managerial accounting plays an integral role in the growth and success of the organization. It can be used for both short-term or long-term needs to improve the performance of an organization. Managerial accounting serves managers in diversified ways; for example, it helps make outstanding decisions that directly impact the growth of an enterprise (Deegan, 2013). For example, Nike Company will incorporate managerial accounting to enable growth and increase sales volume. Nike is a complex organization, and it has branches all over the world which supply retailers and wholesalers with Nike merchandise.
Firstly, the company uses managerial accounting for planning. Managerial planning helps an organization to plan on how to achieve both short-term and long-term goals. Nike organization is a renowned company; thus, it is vital to create a competitive edge in the global markets. In this case, it cannot rely on marketing skillsets alone, but rather it would use financial information to make appropriate decisions. Moreover, managerial accounting usually helps managers to prepare a plan for an organization. Through this process, the company is able to stick to objectives articulated in the mission and vision statement (Weygandt, Kimmel & Kieso, 2015).
Secondly, it helps in the decentralization of decision-making and a company. Decentralization is the process through which managers pass the juniors the role of making decisions. This plan's primary goals are to help all stakeholders be fully involved in an enterprise's growth. Notably, managerial accounting uses the financial information provided by financial accounting to set decisions. What is the role of the decisions made? Financial information provides a road map for managers to handle complex issues such as purchasing equipment or setting new branches. Therefore, the information provided helps managers analyze...