Differences Between Financial Accounting And Management Accounting

Main distinctions or differences between financial accounting and management accounting can be expressed as follows

1. Objective

The main objective of financial accounting is to measure business income and communication of business information to the various categories of persons like management , creditors , suppliers , bankers , investors etc.whereas the main objective of management accounting is to help the internal management.

2. Deals With

The financial accounting deals with all the activities of the business , assesses results of the business as a whole and reveals the overall performance and position of the enterprise whereas management accounting is limited in its coverage. Management accounting concerns with the activities of the different units , departments or divisions and deals with significant activities of the business.

3. Emphasis On

Financial accounting lays emphasis on the past activities and represents historical records whereas management accounting stresses the future and uses historical costs and data for estimating the future.

4. Recording

Financial accounting records the transactions relating to income , expenses , revenue , personal accounts whereas management accounting reports costs and revenue by profit center or responsibility center.