Difference Between Financial Accounting and Management Accounting

Many of you may wonder how Financial Accounting and Management Accounting differ. Thus, today in this article we will discuss about the difference Between Financial Accounting and Management Accounting.

Difference between Financial Accounting and Management Accounting

Basis	Financial Accounting	Management Accounting
Objective	In Financial Accounting we prepare of periodical reports.	In Management Accounting we assist internal management for assessing the financial performance for making decisions.
Coverage	Financial Accounting covers entire business activity.	Management Accounting considers only specific activities which are relevant to management based on management requirements.
Time Span	Financial Accounting is concern or deals only about the historical data.	Management Accounting on the other hand concerned or deals with historical as well as future forecasting and budgeting.
Nature of Information	The nature of financial accounting is definite and uncertain	The nature of management accounting will be probabilistic strict.
Legal Completion	Financial Accounting is an obligation or mandatory for any joint stock company	Management Accounting is purely optional but uses and advantages of management accounting make it desirable.
Publication & Auditing	In Financial Accounting publication of financial statements and auditing of financial accounting is mandatory for a joint stock company	In Management Accounting it is neither mandatory for publication not auditing as it is optional to maintain management accounting for a business
Dependence	Financial Accounting is independent in nature	Management Accounting is dependent in nature
Flexibility	Financial Accounting is more rigid and least flexible	While Management Accounting is more flexible and less rigid.
Age	Financial Accounting exists from centuries ago	Management Accounting has came into existence from past few decades.
Period	Financial Accounting usually reporting period is long i.e. at least one year.	While Management Accounting furnishes information very quickly in a short intervals based on the requirements of the management.
Information	Financial Accounting provides information those both internal management and outside people such as investors, shareholders	Management Accounting only provides information to the people within the organization such as management.
Type of Information	Financial Accounting deals only with monetary information	Management Accounting deals both with monetary and non-monetary information.
Format	Financial Accounting is maintained and published in a specific format	Management Accounting does have a specific format to maintain and publish rather it is maintained as per the requirements of the business.
Valuation	Financial Accounting speak about valuation of assets and liabilities and involved with impairments and revaluations	Management Accounting speaks about the productivity.
System	Financial Accounting is does not take into account the overall system of a business for generating profit, it is rather focused on outcome	Management Accounting on other hand considers bottleneck operations and different ways to enhance the profits by resolving the bottleneck issues.
Standards	Financial Accounting is to be maintained as per the accounting standards.	Management Accounting does not comply or maintained as per any standards as it is generated or maintained only for internal consumption.
Efficiency	Financial Accounting deals with the financial performance and its efficiency	While Management Accounting on other hand is concerned only about the causes of problems and its ways to fix them.
Application	Financial Accounting is prepared to showcase accuracy and financial affairs.	Management Accounting is helpful to management for future course of action and strategizes.
Scope	Financial Accounting scope is pervasive but not as much as management accounting	Management Accounting is broader.
Outputs	Financial Accounting reports consists of Profit and Loss Statement, Balance Sheet and Cash Flow Statement	Management Accounting reports are prepared weekly, monthly, quarter, semi yearly and yearly as per management requirement based on analysis of products, geographies, functions and so on.
Confidentiality	Financial Accounting statements are prepared for public and management thus there is no question of maintaining confidentiality	Management Accounting is maintained only for management (internal purposes) as it contains business secrets. It is highly confidential.
Perspective	Financial Accounting has a historical perspective	Management Accounting has a futuristic perspective.