Financial and Management Accounting: The Contribution to Effective Business and Management - Essay Example

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Financial and Management Accounting: The Contribution to Effective Business and Management

Center of discussion in this paper is management accounting as an internal endeavor where the management accountant addresses the internal environment of the business organization. Management accounting is chiefly involved in planning and controlling. The management accountant envisages the future of an organization and evaluates the performance of the organization with the set standards hence achieving his controlling function. Financial accounting is an external financial initiative. A financial accountant prepares financial accounts for the scrutiny of members in house to the organization and to other external members. The financial accountant is responsible to the stakeholders of the business: shareholders, employees, creditors, debtors, customers, and the community it serves. To begin with, the difference between financial accounting and management accounting will be delineated in regard to the requirement for an organization to have either or both. Financial accounting is mandatory for any company seeking to be registered under the company’s Act. This is since each company needs to present the financial prospect of the organization in the next five years after commencing business. Consequently, financial accounting is required by the tax authorities and the exchange and commission authorities hence it is mandatory for any organization to have financial accounting. However, management accounting is for the benefit of the internal organization and is therefore not a mandatory requirement. ...Show more

Summary

The researcher of this essay will be aimed at outlining the differences between financial and management accounting, delineating their benefits and limitations and consequently explaining their contribution to effective business management…
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