Management Vs Financial Accounting - Accounting Basics

What is the difference between Management Accounting and Financial Accounting?

In order to ascertain the profit or loss of the firm and the financial position of the firm, financial statements are prepared.

The data from the financial statements is collected, analyzed and then the analyzed data is provided to the management by management accounting.

The difference between the financial accounting and management accounting is as follows:
Financial Accounting
Management Accounting
The base of financial accounting is the monetary transactions.
The base of management accounting is the financial accounting data.
The main functions of financial accounting are recognition, classification, recording of financial transactions on actual basis, and preparation of financial statement.
The main functions of management accounting are collection of data from financial accounting, provision of necessary information to the management for planning, decision-making, and evaluation.
Financial reports need to be supported by relevant figures.
Management accounting reports need to be presented by both subjective and objective figures.
Success of financial accounting does not depend on sound management accounting system.
Success of management accounting depends on sound financial accounting system of a concern.
The management, shareholders, creditors and financial institutions use financial reports.
Management exclusively uses the management accounting reports.
Statutory audit of financial statements of concerns is required as per applicable law.
No statutory requirement of audit for reports prepared by management accountants.
At the end of every accounting period, financial statements are prepared.
As and when required by the management, the reports are prepared.
Financial accounting is used for ascertaining the profit or loss of a firm and to know the financial position.
Management accounting is used for evaluating the performance department and section-wise and the organization as a whole.

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