Financial Versus Managerial Accounting - Essay Example

I hereby offer to explain some useful similarities and differences between financial and managerial accounting as well as some managerial accounting reports that you can expect within EEC:Similarities1.Both financial and management accounting are decision-making tools because they provide crucial financial information for decision making.2.Both financial and managerial accounting portrays the financial health of an organization. They allow the users of the information presented to make financial decisions, which influence the financial health of organizations.

Differences1.Management accounting provides accounting information internally (to the management) whereas financial accounting informs external stakeholders on financial matters of a company. 2. While financial accounting is a statutory requirement for organizations, management accounting is voluntary for organizations. There may be mandatory precise formats and standards for statutory accounts.3.Financial accounting must abide by predetermined accounting principles that are generally accepted whereas management accounting is basically an estimate, which emanates from the fact that exact figures required do not exist every time crucial decisions need to undertake. 4.Financial accounting yields financial accounts usually prepared at the end of a trading period, mostly a year.

On the other hand, management accounting yields accounts that are prepared at any time depending on the frequency at which the management requires such accounts.5.Financial accounting emphasizes the past while managerial accounting focuses on the future.Examples of Managerial Accounting Reports Within EECConcerning managerial reports within EEC, you can expect:1.Horizontal analysis: this is a financial statement analysis approach that focuses on variations in the corresponding financial statements for a particular period.

It is used to assess trend situations.