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This question is about what an accountant does.
Financial vs. Managerial accounting
The difference between financial accounting and managerial accounting is that financial accounting puts focus on documenting financial transactions, while managerial accounting focuses on the collection of a company's key financial data.
Financial accounting documents financial transactions a company makes, this is typically done through the use of financial statements like income statements and company balance sheets. Financial accounting has goals internally and externally, meaning both the company and the public can benefit from the review of these documents.
Managerial accounting involves the collection and tracking of a company's key financial data. Managerial accounting enables companies to assess their financial operations with the goal of identifying issues and then creating solutions that can benefit companies in monetary terms. This type of accounting is an internal one, normally done for stakeholders, and not the public.
Key Takeaways:
| Financial accounting | Managerial accounting |
|---|---|
| Financial accounting documents financial transactions a company makes, this is typically done through the use of financial statements like income statements and company balance sheets. | Managerial accounting involves the collection and tracking of a company's key financial data. |
| Financial accounting has goals internally and externally, meaning both the company and the public can benefit from the review of these documents. | This type of accounting is an internal one, normally done for stakeholders, and not the public. |
| Financial accountants normally produce financial statements at the end of every accounting period. This could be every month, quarter, year, or other common time frame. | Managerial accounting sees accountants preparing reports at more random intervals; this type of accounting is not usually governed by highly specific time frames, like a business quarter or fiscal year. |
| Financial accounting normally includes all of an organization's financial transactions. | Managerial accounting is more known to include financial forecasts for a company if they choose to take different actions or implement new financial strategies. |
| Financial accounting applies to a company in broad terms, meaning all of its financial activities. | Managerial accounting typically involves a more detail-focused approach to one or several aspects of a company. |
| Financial accounting is crucial for determining a company's actual value through its revenue generation, profits, and expenses. | Managerial accounting is essential for understanding the liabilities and assets that a company has and how they affect profit and productivity. |
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