Manegerial Finance Essay Example | Topics and Well Written Essays - 1500 words

Manegerial Finance - Essay Example On the other hand management accounting is expected to provide information for analysis and use by internal uses of an organization like the senior executives and managers. Different data and financial data are required by different user groups. External users are more interested in the financial status of the company and they analyze the financial information presented with the general economic trend and the conditions of the industry in which the organization operates. Financial accounting makes information available on the financial transaction that have taken place in the past and this information is analyzed by the investors and creditors to assess overall performance of the company in which they have staked their funds. The internal users of the financial information require different types of information which they use to assess the internal performance of the company in various disciplines. The internal users also need non-financial information like the movements of competitors, levels of customer satisfaction which are assimilated and analyzed to help the growth of the company in the proper direction. As against the scope of financial accounting which deals more with historical data, management accounting deals with both past and present data. ... ation and rely on them, the financial accounting is made subject to the regulations of governing bodies like Financial Accounting Standards Board (FASB) and Public Company Accounting Oversight Board (PCAOB). In contrast the management accounting is not subject to any regulatory measures being presented by any agencies. The reason for absence of regulatory control is that management accounting prepares information only for the internal users and therefore is not subjected to any regulations. Since there is involvement of any public interest no need to protect the information has been felt. Periodicity of Reporting Financial accounting bases its reporting on the basis of historical data and therefore there is the necessity for making periodical reports. The financial reporting is done for different periodicity like monthly, quarterly, and annual reporting. Management accounting reports on the other hand are made for continuous periods so that the internal users would be able to evaluate the past and present performances of various functional divisions and departments. There may be some urgent needs of management accounting reports to evaluate a capital expenditure project or some other investment decisions. Forecasts about the future prospects and growth of business of the organization also need management accounting reports. Therefore there is the continuous need of the management accounting information by the internal users. (Edmonds et al, 2006) The differences in financial accounting and management accounting can be summarized in the following table: Criteria Financial Accounting Management Accounting Primary users External Internal Primary organization focus Whole organization Parts or subsections; specific areas Information characteristics Must be GAAP; based