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What is the difference between financial accounting and management accounting?

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Lateefah’s Answer

Financial accounting is geared towards external use of financial information. So financial accountants would be the ones to prepare the financial statements of the company that are shared with investors and other external stakeholders.

Management accounting is geared towards internal understanding of financial information that management of a company uses to manage operations and make business decisions. So this would include things like budgets for the period, inventory management reports, cash flow forecasts and so on.

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Emily’s Answer

Financial accounting is focused on the financial position of the company, while managerial accounting is focused more on the substance on the business (i.e. internal budgets, operations, etc.)
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Daniel’s Answer

Think of financial accounting as reporting your results of operations and financial health to the public and other interested parties and managerial accounting to reporting on certain internal metrics to management (i.e. allocation of overhead costs to inventory).
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