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Management Accounting Versus Financial Accounting

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Accounting
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American Public University System
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Running head: MANAGEMENT ACCOUNTING 1
Management Accounting Versus Financial Accounting
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Institution

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MANAGEMENT ACCOUNTING 2
Management Accounting Versus Financial Accounting
Financial accounting is a branch of accounting that entails summarizing, analyzing and
recording business transactions within a period of time. The transactions are introduced and
summed up in a financial accounting report which incorporates the articulation of monetary
records. Financial accounting's essential role is to set up the budgetary reports of an organization,
which are otherwise called financial statements (Horngren et al., 2005). On the other hand,
managerial accounting is concerned with the recognizable proof, translation, and estimation of
accounting information. This branch of accounting helps managers make effective operational
decisions to increase their operational efficiency, it also aids in making a long-term investment
decision. Management accounting helps the management team to make an informed decision
regarding the operational activities of the company. This branch of accounting is essential as it
creates future forecasts of sales, expenses, and profits among other important aspects necessary
for budgeting. These forecast are used by the management to make future decisions regarding the
operations of the company.
This accounting branch is vital has it is utilized for internal purposes to obtain expected
results and make decisions based on the reports and data produced with management accounting
assistance. Besides, it assists with making productive and powerful business methodologies. The
two branches are distinct from each other, for instance, reports prepared in financing accounting
are utilized by both internal and external users while management accounting is used by internal
users, mostly the management of the company (Bromwich & Bhimani, 2005). In most instances,
reports prepared using financial accounting are released to the public for their analysis. Financial
statements users such as investors, employees, suppliers, lenders and the government rely on the
information contained in these reports to determine their involvement in the company. Investors

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Running head: MANAGEMENT ACCOUNTING Management Accounting Versus Financial Accounting Name Institution 1 MANAGEMENT ACCOUNTING 2 Management Accounting Versus Financial Accounting Financial accounting is a branch of accounting that entails summarizing, analyzing and recording business transactions within a period of time. The transactions are introduced and summed up in a financial accounting report which incorporates the articulation of monetary records. Financial accounting's essential role is to set up the budgetary reports of an organization, which are otherwise called financial statements (Horngren et al., 2005). On the other hand, managerial accounting is concerned with the recognizable proof, translation, and estimation of accounting information. This branch of accounting helps managers make effective operational decisions to increase their operational efficiency, it also aids in making a long-term investment decision. Management accounting helps the management team to make an informed decision regarding the operational activities of the company. This branch of accounting is essential as it creates future forecasts of sales, expenses, and profits among other important aspects necessary for budgeting. These forecast are used by the management to make future decisions regarding the operations of the company. This accounting branch is vital has it is utilized for internal purposes to obtain expected results and make decisions based on the reports and data produced wi ...
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