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Mohammad Ali
Mohammad Ali, Accounts & Financial Advisor
Category: Finance
Satisfied Customers: 370
Experience:  Qualified Cost & Management Accountant, with 2 years experience in Financial & Audit Services
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Discuss the role of the financial accounting and managerial

Customer Question

Discuss the role of the financial accounting and managerial accounting functions in organizations and some of their job responsibilities. What are some of the differences between the two and the type of reports they may each use?
Submitted: 7 years ago.
Category: Finance
Expert:  Mohammad Ali replied 7 years ago.

The salient features of financial accounting and management accounting, along with their differences, are enumerated below:

 

Financial accounting

Management accounting

Main purpose

To record the accounting data with accuracy and report on the financial performance and position of a business

To generate effective information for management in order to help them take effective decisions

Information audience

For use by both insiders and outsiders

For use by management only

Information class

The information is usually made public

The information is usually confidential

Time frame

Information is mainly historical

Information is future-looking

Reporting format

The reporting format is governed by international accounting standards and US GAAP

There is no set format. Organizations can have any format that suits them

Qualification and competence

In order to generate financial reports, one has to be a qualified member of AICPA, CIMA, ACCA or a similar recognized institute

Management accounting requires no formal qualification, although CIMA qualified people are much suited to the job

Reporting frequency

Information is reported usually on a quarterly basis, with a mandatory filing of accounts at the year-end

Management accounting information can be generated whenever the management wishes so

Type of reports used

· Income statement

  • Balance sheet
  • Cash flow statement
  • Budgets
  • Sales forecasts
  • Variance reports
  • Costing statements
  • Limiting factor analysis
  • Job cost sheets