Financial Accounting may be defined as the science and art of recording and classifying business transactions and preparing summaries of the same transactions and preparing summaries of the same for determining profit or loss and the financial position of the concern. The object of is to find out the profitability and to provide information about the financial position of the concern. Its purpose is to provide information for others to the value of a company. It is concerned with record – keeping directed towards the preparation of Profit and Loss Account and Balance Sheet. Managerial Accounting is concerned with the supply of information which is useful to management in decision making for the efficient running of the business and in minimizing
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Differences between Financial Accounting and Managerial Accounting Financial Accounting Managerial Accounting 1. It is used internally. 1. It is used for external stakeholders. 2. The time horizon is for historical information. Example: - Managers and …show more content…
2. Statement of changes in Financial position It includes a Funds Flow Statement and a Cash Flow Statement. Funds flow statement shows the sources and applications of cash and cash equivalents during a period. Objectives of preparing a Financial Statements (i) To present a true and fair view of the financial performance (i.e. profit/ loss) of the business. (ii) To present a true and fair view of the financial position (i.e. Assets/Equity and Liabilities) of the business. Characteristics of Financial Statements (i) They are related to past periods and hence are historical documents. (ii) They are expressed in terms of money. (iii) They show profitability through statement of profit and loss and financial position through balance sheet. Managerial Accounting is the process of identification, measurement, accumulation, analysis, preparation and communication leading to managerial decisions. It is for internal planning and controlling responsible to: - a) Customer’s for safe and defect free products and services. b) Creditor’s for repaying principal and interest. c) Employees for a safe and defect free
Differences between Financial Accounting and Managerial Accounting Financial Accounting Managerial Accounting 1. It is used internally. 1. It is used for external stakeholders. 2. The time horizon is for historical information. Example: - Managers and …show more content…
2. Statement of changes in Financial position It includes a Funds Flow Statement and a Cash Flow Statement. Funds flow statement shows the sources and applications of cash and cash equivalents during a period. Objectives of preparing a Financial Statements (i) To present a true and fair view of the financial performance (i.e. profit/ loss) of the business. (ii) To present a true and fair view of the financial position (i.e. Assets/Equity and Liabilities) of the business. Characteristics of Financial Statements (i) They are related to past periods and hence are historical documents. (ii) They are expressed in terms of money. (iii) They show profitability through statement of profit and loss and financial position through balance sheet. Managerial Accounting is the process of identification, measurement, accumulation, analysis, preparation and communication leading to managerial decisions. It is for internal planning and controlling responsible to: - a) Customer’s for safe and defect free products and services. b) Creditor’s for repaying principal and interest. c) Employees for a safe and defect free