How Is Managerial Accounting Different from Financial Accounting?

How is managerial accounting different from financial accounting?

The major difference between managerial and financial accounting is one is looking within the company walls, while the other is looking outside of the business. During the next couple paragraphs we will be breaking down the two different types in greater detail.

Managerial accounting is looking internally into the way a company does business. This information is used by the management team for briefings on ways to improve their business practices. Managerial accounts according to Campus Common will be found on organizations management teams, “on which managerial accountants play an integral role, seeks to create value for the organization by managing resources, activities” (Managerial Accounting, Sixth Edition, 2004). The day in age when accounts were seen and not heard have come and gone. Today you will find these accountants sharing space in conference rooms where the decisions are made. Ultimately they are not the individuals making the decision, but a well respected managerial account data will have an influence on the decision.

Now let us take a look at financial accountants and how their information generated is required for outside agencies. Like the managerial accountants, managers look at this information but not in as much detail. These reports are more scrutinized by what is required for government by law. Required and must conform to generally accepted accounting principles. Financial reports are “Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission”. Financial accountants are equally important but just in a different aspect. If these individuals do not do their job properly management could face severe penalties and possibly even jail time.