6 Differences in Management Accounting and Financial Accounting

Accounting itself is divided into two types, namely including management accounting and financial accounting.

Both have differences based on characteristics. objectives, and types of input and output. So that you don't feel confused, please refer to the differences in management accounting and financial accounting below:

6 Differences in Management Accounting and Financial Accounting

1. User Report

The first difference between management accounting and financial accounting is based on the users of the reports. Well, for financial accounting it is usually used to present financial information to external parties of the company and is not used for decision and policy making. These parties include creditors, shareholders, director general of tax, and financial analysts.

Whereas in management accounting, financial information is used for management and internal company. This information will later be used as an evaluation material as well as a decision-making tool for the company. Some of the parties who use management accounting are executives, managers, sales, supervisors, administrative employees, and so on.

2. Different Information Focus

In financial accounting, the focus of information is on the past accompanied by a description of the company's management responsibilities from managing company funds. In contrast to management accounting which tends to be oriented to the future.

3. Goal

The difference between management accounting and financial accounting also lies in the objectives of both. Financial accounting can produce financial reports that can describe the company's performance and condition in a related period. The aim is to assist outsiders in making investment and economic decisions so that management performance evaluations can be carried out.

For financial accounting itself, it aims to produce detailed and specific reports and can identify various problems that arise and can find out how to solve these problems.

Management accounting will be very useful for parties within the company because it contains the latest information such as performance evaluation, unemployment, operational optimization, and so on.

4. Scope

Financial accounting reports financial information about the company as a whole such as income statements, balance sheets, and so on. Meanwhile, management accounting reports provide information that aims to report certain parts of a company, such as production, marketing, and so on.

5. Type of Information

The difference between management accounting and financial accounting then lies in the type of information. In financial accounting, information is only about financial measurements based on Indonesian Financial Accounting Standards (SAK) or Indonesian Financial Accounting Standards. Management accounting itself contains information about financial and operational measurements as well as physical measurements of processes, suppliers, competitors and customers.

Management accounting reports have no limitations in accounting principles. For a type of accounting that is based on principles that can be beneficial to management. Both in terms of calculation and measurement.

6. Nature of Information

The nature of information for management accounting must be able to assist management in making decisions. Starting from the mission in terms of planning, organizing direction, and also controlling. Meanwhile, financial accounting requires a level of objectivity, accuracy, accuracy, and can be verified.

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