What is the difference between financial accounting and management?
Financial and administrative accounting has a specific purpose, although both methods use the same financial information from the company. Companies will often use both accounting types, although there are different differences between them. Financial accounting focuses on external users, has set a reporting period, allows the use of general purpose, includes summary messages and must comply with national accounting standards. Management Accounting has internal users, requires occasional reporting, focuses information for future decisions, relates to specific parts of the company, and includes only relevant data.
Most individuals think about financial accounting when reviewing the company's financial information. This is mainly because publicly held companies must publish information to the public, including a statement of financial accounting known as a statement of profit and loss, balance sheet and cash flow statement. There may be other financial information on special reports such as depicted ecation, credit amortization loanand plans to finance your own capital. These reports are usually published every month, with a quarterly showing more important because the company establishes its earnings of this information.
When individuals compare financial and administrative accounts, they may have a harder time to understand the other because it is quite different. Account management reports are not common and may not adhere to any standard statement methods. This results in companies that companies can create any process of reports that they consider necessary. Although the data is the same in financial and administrative accounting, the purpose is different, which gives the company the ability to use management accounting as they wish.
Although the accounting of the proceedings bears specific regulations, the company must ensure that their measurement is reasonable. For example, an attempt to allocate the cost that does not apply to the production process is not generally allowed. Make it possibleE Company to avoid the costs of these costs and raising assets. The final result would be a higher income reported by a company that violates the standards according to the principles of financial accounting. This is one of the most important links between financial accounting and administration.
The focus between financial and administrative accounting is also different. The first focuses on reporting net income and profit that the company earns from business operations. Management of proceedings often focuses on internal costs. If the company cannot check the costs properly, each product produced more money. This requires the company to raise prices or reduce costs because low margins are not usually sustainable. The ability to connect two accounting systems is often an integral process in successful business.