ACC 220 Week 5 DQ 1 - 7379

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Financial accounting and management accounting both prepare and analyze financial data. However, certain aspects of these two fields are very different.
Financial - statements that are used by EXTERNAL forces (shareholders, legal, etc)
a. Purpose is to demonstrate past performance of the organization
b. Follow a specific set of guidelines established by government entities
c. Used and shared by the entire public, available to anyone

Managerial - statements or processes that are used INTERNALLY
a. Purpose is to predict or change future performance of the organization
b. Can be created or follow any set of rules or guidelines
c. Used internally by the organization and, most likely, remains confidential and away from competition.

While users of managerial accounting are primarily those who operate within organizations, such as employees and managers, financial accounting users are those who operate outside organizations, such as creditors and investors. While managerial accounting reports are produced for any time period, usually on a daily, weekly, or monthly basis, financial accounting reports are produced for a set time period, usually a fiscal year. While managerial accounting deals with present and past information, along with future forecasting, financial accounting reports only deal with historical financial transactions. Managerial accounting reports tend to be confidential and exclusive to the top management of organizations because they deal with aspects such as sales forecasts, budget analysis, mergers, and feasibility studies, whereas financial accounting reports are accessible to internal as well as external users, as they deal with basic requirements of reporting including profitability, stability, and liquidity. While standard-setting bodies do not regulate managerial accounting procedures, financial accounting is held to Generally Accepted Accounting Principles (GAAP) put in place by professional bodies of each country. 
The distinguishing features of managerial accounting are:
Applies to all types of business
Applies to all form of business
Applies to not-for-profit and profit oriented companies
More responsible for strategic cost management
Teams with people from production, marketing, engineering, etc.      
Aid in making critical decisions



Solution Description


Financial accounting and management accounting both prepare and analyze financial data. However, certain aspects of these two fields are very different.
Financial - statements that are used by EXTERNAL forces (shareholders, legal, etc) 
a. Purpose is to demonstrate past performance of the organization 
b. Follow a specific set of guidelines established by government entities 
c. Used and