Both Managerial and financial accounting play an important role within Today's business companies. Understanding the difference and similarities of managerial and financial accounting will strengthen a company as a whole. Though, managerial and financial accountings seem to contain similar information; managerial accounting provides information that financial accounting does not. Managerial accounting is the progression of identifying, measuring, analyzing, interpreting, and communicating information for the progression of a company's success (Phillip, Libby, Libby, 2006). Information that managerial accounting includes are financial and non financial data that are related to products, budgets, and cash flow. The purpose of managerial accounting is to motivate managers to make the proper decision to help meet the company's goal.
Managerial Accounting sole purpose is to provide the information needed to better manage the daily operations of a company and does not have to comply with (GAAP) Generally Accepted Accounting Principles (Phillip, Libby, Libby, 2006). Since managerial accounting is provided by the company managers this gives the managers the discretion of deciding what information can be useful in the daily operations of the company.
Some of the information can compare history and current data, price modeling, cost analysis, capital budgeting, client profitability analysis and many other form of information to help with continuous improvement of the business operations (Weygandt, Kimmel, Kieso, 2007).
The accuracy of these financial reports is critical to the success of any company. Many companies thrive or fail due to their accounting procedures and the consequences of decisions based upon them. To follow the reports one can see just how important accounting and record- keeping is to any business. Business owners and managers use financial and managerial accounting as a major means of reviewing the company's performance and financial status. Financial accounting provides a summary of a company's assets and liabilities which are to...