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The Differences Between Managerial And Financial Accounting

Updated on March 4, 2013

There are several differences in managerial and financial accounting. The differences are rooted in who the information is for, whether it be for outsiders or insiders. Managerial accounting procures information for the company’s management and decision makers. It is used to find trends in yearly reports, as well as interpret cost of goods sold. Whereas, financial accounting is more geared for outside sources like regulation agencies, stock holders and creditors; the audience intended changes the information desired and thus reported. The information revealed with financial accounting is comparable to managerial accounting, however financial accounting will not get in to as much depth as cost/managerial accounting will.

Which is Better?

GAAP is used as the guidelines for both forms of accounting, making the reports more standard, thus easier to interpret, as well as more accurate. Although both have their own merit and need to a company, I think that accounting based on financial is more reliable to the majority of the public. Without correct assessments of a company, stock holders would find it impossible to make sound investment decisions. Financial accounting is also needed to collect taxes that are important to continue our country’s financial well being. Managerial accounting helps companies make good decisions from certain data collected and analyzed. Both are required for a well rounded, knowledgable economy.


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