Discussion Managerial vs. Financial Accounting

ACC501 MOD01 Discussion Managerial vs. Financial Accounting
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Management and financial accounting have similarities, but the purpose of managerial accounting differs from financial accounting. Management accounting places more importance on the future through highlighting on relevant information for decision-making. On the other hand, financial accounting focuses on past information that represents a true and fair view about the financial position. As such, management accountants look into changes in economic conditions to facilitate planning and control to estimate what would happen as opposed to what has already happened. Accurate forecasts are critical to budgeting and decision-making in management accounting (accountingdetails.com, n.d.). Before implementing business strategies management accountants rely on management accounting information for planning and forecasting.
Management accounting focuses on specific segments of an organization, while financial accounting focuses on the organization as a whole (accountingdetails.com, n.d). Segmental reporting in financial accounting is secondary emphasis compared to management accounting (accountingdetails.com, n.d). In management accounting, variable costing is a tool for the management to identify cost data that can be controlled. The management also seeks information on cost, revenue and profit to facilitate cost allocation on the basis of each segment for the traceable costs and this provides a clearer picture about the relationship between costs and the level of activities.
Management accounting seeks to improve operations as well as planning and controlling, while financial accounting merely reports financial results. The scope also differs as management accounting information is then mostly used by the management and internal stakeholders when making decisions (Pearson Learning Solutions, 2014). The structure of management accounting is based on business needs since inter...