Question

Define Managerial Accounting and explain the difference between Financial and Managerial Accounting.

PLEASE BE VERY DETAILED :)

Answer 1

Solution. An organization operating in an economic competitive market sets a plan to achieve general objective of desired profit level along with social responsibility. Managerial Accounting encompasses analysing and interpretation of reports of an organization to facilitate decision making process in order to bridge gap between actual and desired operations results. It is an internal process which revolves around monetary and non-monetary affairs without outside influence of auditing standards or accounting constraints.

Whereas, Financial Accounting encompasses established policies, rules and standards of recording and reporting of financial activities to achieve established plans and verification of results by auditors to obtain true monetary position of the organization for gaining stakeholder's and external users interests.