However, it also reports past and present transactions on the balance sheet and the company’s income and cash flow statement. Managerial accounting is use to focus on providing information within the company or organization, of which includes planning and making decision for the company, it’s a manager’s job, he/she must have proficiency in the managerial accounting because it is the foundation of the company’s future, and the manager’s aim is to control the company’s operation by improving the way internal reports and external financial statement will be used in decision making within the company.
In addition, Managerial accounting deal with topics such as cost behavior, profit planning, operational budgeting are all financial decision to be made to produce the external financial statements and its the managers of the managerial accounting department responsibility to have them done. To compare the two accounting system I would have to say they have similar function, they both produce reports one for external and one for internal that is use for making decision for the company.
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The managerial accounting deal with confidential financial reports that is used by the CEO’s within the organization or company, these reports are consist of sales forecasting, the company’s budgets analysis and comparative analysis and any type of merge or consolidation reports the company did in a day, weeks or months. In addition, these reports is generated on a timely basic such as weekly or monthly it is more flexible than financial reports, and it does not focus on general accepted accounting principles (GAAP).
Moreover it is use by the CEO to fore see the future of where the company is going. The financial accounting is more concern with the external aspect of the company, so when generating the reports for their stockholders, lenders, financial analysts, and others outside of the company they apply the general accepted accounting principles (GAAP).
In addition financial account reports or focus on the past in a more historical factor of the four financial statement of which include a balance sheet, income statement, owners’ equity statement and cash flows statement, the report are generated for a set period of time such as a fiscal year to give the company a history for the hold years. In conclusion financial and managerial accounting can be said that they play a very important part in business making decision, if the rules are apply in the correct and ethical manner by the CEO’s and mangers .
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