Answer to Question #239864 in Management for Nablis

Question

Write suitable discussion related to (i) the definitions of accounting and the forms of the

accounting as a discipline and (ii) the similarities and differences of Financial Accounting and Management Accounting.

Answer 1

i

Accounting is the process of recording, summarizing, analyzing, and presenting business and financial information of an entity with the aim of reporting and presenting the overall financial status of that entity. The forms of accounting are,; managerial or management accounting, financial accounting, cost accounting, forensic accounting, tax accounting, public sector accounting and auditing.

Question ii

Similarities between financial accounting and management accounting

1. Both forms of accounting are integral part of the accounting system
2. Both forms of accounting deal with economic events which are fundamental to an organization and need thorough reporting.
3. Both determine a measurement of costs that relate to different accounting periods.
4. Both forms of accounting result in the production of financial statements that form a basis for an organizational decision making.

Differences between financial accounting and management accounting

1. The financial accounting information is used by all stakeholders both internally and externally while management accounting information is used by the top level executives in the organization for management decision purposes.
2. Financial accounting embraces double entry system of accounting while management accounting does not at all apply the use of double accounting system in the preparation of its statements
3. Financial accounting uses the generally accepted accounting principles while management accounting does not make use of the GAAPs